AES $300M Trust Conv Pfd Secs Rated `B+' by Fitch IBCA.

NEW YORK--(BUSINESS WIRE)--Oct. 7, 1999--

Fitch IBCA assigns its 'B+' rating to $300 million in trust convertible preferred securities to be issued by The AES Corp.'s (AES) affiliate and statutory business trust, AES Trust III.

The trust preferred securities have a stated redemption date of 2029. The ratings of all other outstanding AES debt, listed below, are affirmed. Proceeds from the sale of the preferred securities will be used by the trust to purchase newly issued junior subordinated debentures from AES also maturing in 2029. The trust preferred securities will rank equally with AES's existing $150 million convertible junior subordinated debentures and $550 million in term convertible securities, issued by AES Trusts I and II. AES will use the proceeds from the issuance of the junior subordinated debentures to fund a portion of the purchase price of the Drax Power Station, Ltd., to repay part of a $340 million bridge loan, unless a waiver is received, repay amounts outstanding under the revolving credit facility and for general corporate purposes.

The ratings reflect continued growth and diversification of cash flow sources through the worldwide development and acquisition of electric generation and distribution facilities, the favorable operating record of existing facilities and the company's willingness to use equity to support its growth. The ratings also reflect the negative cash flow impact of the currency devaluation in Brazil and portfolio exposure to Brazil and other emerging market economies.

Concurrent with the issuance of preferred securities AES will sell 16 million shares of common stock. Proceeds from the sale of the stock will be used for the same purposes as the proceeds from the preferred securities as well as to fund a portion of the CILCORP purchase. The remainder of the Drax and CILCORP transaction amounts will be funded with non-recourse project financing. Fitch IBCA has previously stated that both the Drax and CILCORP acquisitions are favorable for the company's credit outlook since these acquisitions will further reduce AES's exposure to emerging markets' investments in Asia and South America and will upstream positive cash flow to AES from the outset. In addition, projected cash flow from the operating projects along with projects coming online is expected to be sufficient to cover parent company obligations in the near term. The proposed sale of common stock occurs approximately one half year after AES issued another 10 million shares of common stock, which resulted in net proceeds to the company of $502 million.

AES corporate debt relies on cash flows obtained primarily from dividends upstreamed from the company's equity ownership in leveraged electricity generating facilities and distribution subsidiaries. Therefore, the AES corporate debt is structurally subordinated to nearly $5.4 billion of non- recourse project and operating company debt.

AES ratings affirmed are:

-- $600 million corporate revolving bank loan at 'BB+',

-- $700 million in senior unsecured notes at 'BB+',

-- $1.1 billion in senior subordinated notes at 'BB',

-- $150 million convertible junior subordinated debentures at 'B+',

and

-- $550 million in term convertible securities, issued by AES Trusts

I and II at 'B+'.