AGL Resources Affirmed at 'A-' by Fitch; Outlook Stable.

Energy Editors/Business Editors

NEW YORK--(BUSINESS WIRE)--May 7, 2004

Fitch Ratings has affirmed the outstanding credit ratings AGL Resources, Inc. (AGLR) and its two debt issuing subsidiaries Atlanta Gas Light Co. (AGLC) and AGL Capital Corp. (AGCC), as listed below. Approximately $1.1 billion of outstanding debt and trust preferred securities are affected.

AGLR's ratings reflect the low business risk of its core regulated gas distribution business, management's favorable track record of operating and investing in a modest sized portfolio of non-regulated businesses, and the continued strengthening of key consolidated debt leverage and coverage ratios.

Considerable credit strength is derived from AGLR's stable regulated gas distribution operations which serves approximately 1.84 million customers throughout Georgia, southeastern Virginia, and a small portion of Tennessee. These operations contributed roughly 80% of 2003 operating income. AGLC ('A' senior unsecured debt rating), AGLR's largest subsidiary, is expected to remain a strong cash flow contributor to AGLR given its robust service territory economics, track record of profitable expansion and stable earnings stream following the full unbundling of the gas industry in Georgia. As a pure energy delivery company, AGLC operates under volume-insensitive straight-fixed variable rates. Accordingly, changes in customer usage patterns due to weather and improvements in equipment efficiencies or other business conditions now have minimal financial impact. In addition, the adoption of weather normalized rates in AGLR's Virginia jurisdiction has added further predictability to gas distribution segment performance.

AGLR's non-regulated business strategy is focused primarily on retail gas marketing in Georgia and providing wholesale gas services through its Houston-based Sequent Energy division. Capital spending in these businesses remains relatively modest and non-regulated activities continue to generate economic value for AGLR in the form of cash dividends and/or earnings. A moderate credit concern is the recent expansion of Sequent's trading activities to support new asset management and gas supply arrangements with non-affiliated gas utilities in the Northeast and Mid-Atlantic regions. Previously, Sequent focused primarily on managing and optimizing excess upstream pipeline capacity and natural gas supply on behalf of AGLR's utility affiliates. Notwithstanding the increase in volumes, Fitch notes that Sequent's overall risk parameters, including portfolio tenor and risk tolerance, remain at relatively conservative levels.

Consolidated credit measures have strengthened due to the de-leveraging impact of the issuance of $168 million of new common equity during 2003, the refinancing of higher cost debt, and improved performance within the retail gas marketing segment. For the 12 month period ended March 31, 2003, AGLR's adjusted debt to capitalization ratio approximated 45.6% with cash flow coverage of fixed charges of about 4.8 times (x). These ratios approximated 62% and 3.0x, respectively, at year-end 2002.

AGLC's rating incorporates its low business risk profile offset by AGLR's reliance on upstream cash flows from AGLC to service holding company level debt and preferred securities totaling roughly $860 million as of March 31, 2004. Although AGLC's standalone credit ratios have strengthened due to the ongoing refinancing of maturing debt obligations at the AGLR level, AGLC's rating is constrained due to its financial ties with AGLR. Affiliated companies including AGLC participate in a corporate money pool arrangement at AGLR. Furthermore, the Georgia regulatory framework does not provide a strong ring-fence limiting AGLC's ability to upstream dividends and/or excess cash flow to AGLR.

The following is a summary of outstanding ratings affected by today's action:

AGL Resources, Inc.

-- Senior unsecured debt rating 'A-'

-- $75 million Trust preferred securities (issued by AGL Capital

Trust I) 'BBB+'.

Atlanta Gas Light Co.

-- $241.8 million outstanding medium term notes 'A'.

AGL Capital Corp. (guaranteed by AGL Resources, Inc.)

-- $525 million outstanding senior notes 'A-';

-- $150 million trust preferred securities 'BBB+';

-- Commercial paper program 'F2'.