Correction: Fitch Rates Nashville Metro -- Tennessee -- Water-Sewer Bonds 'AA'.

Business Editors

NEW YORK-(BUSINESS WIRE)--Nov. 12, 2002--(this is an amended version of a press release issued earlier today, containing revised information on the outstanding bonds at the end of paragraph 1)

Fitch rates The Metropolitan Government of Nashville and Davidson County (Metro), TN's $32,745,000 water and sewer revenue refunding bonds, series 2002, 'AA'. The series 2002 bonds [non-alternative minimum tax] are expected to price the week of November 18 competitively. Final maturity is in 2016. The series 2002 bonds are secured by water and sewer system gross revenues and are on parity with roughly $500 million outstanding water-sewer debt. Proceeds of the series 2002 bonds will be used to refund portions of the water and sewer system's series 1992 and series 1993 bonds. At this time, Fitch assigns an 'AA' rating on Metro's outstanding $526,155,000 million (total debt after issuance) water-sewer revenue bonds, representing the series 1986, 1992, 1993, 1998A, 1998B and 2002 bonds.

The 'AA' rating reflects Metro's near monopoly position in Metro's service area, healthy financial operations, strong liquidity position and a largely-cash funded capital improvement program (CIP). Metro's water-sewer system serves roughly 1.3 million people of the Metro area, including all small, intermediate and large commercial users. The system's credit features are also enhanced by adequate physical capacity and affordable user rates.

The Rating Outlook for the Metropolitan Government of Nashville and Davidson County, TN's (Metro) water and sewer system revenue bonds is Stable. Though the water-sewer debt load is relatively high at $526 million (after issuance), the system should not only continue to produce adequate net revenues but also excess cash for bondholder security. Debt service coverage is expected to dip closer to the rate covenant than in years past due to new projects coming on line and current liquid balances will largely be used for pay-go capital funding. Metro's affordable cost of service reflects potential financial margin in future years if needed. No additional water-sewer debt or rate adjustments are forecast.

Metro's strong water-sewer financial operations in recent years have yielded debt service coverage ratios well above the 1.10 times (x) rate covenant. Despite Metro's high water-sewer debt load, solid financial results absorbed a significant rate cut in 1999 while simultaneously building cash balances, with roughly $160 million of current cash balances that has been earmarked for capital pay-go spending. Metro's overall $321 million CIP for the years 2003-2007 will be funded by a total $300 million in cash reserves from operations, preventing the need for additional water-sewer debt through this forecast period. Metro's last rate adjustment was a reduction in water rates in 1999, and sewerage rates have been constant since 1996, with no additional rate changes for either the water or sewerage system planned through the 2007 revenue forecast. Water supply from the Cumberland River is expected to an adequate source of water for Metro and both water and wastewater physical plants have sufficient capacity for the foreseeable future. DSCR (x) is expected to slightly decrease through 2007, as the new rate base from the 1999 water rate decrease is matched with slightly higher operating expenses. By 2007 and completion of the current CIP, liquid balances should decrease to roughly $27 million.