Fitch Affirms AGL Resources' IDR at 'A-'; Outlook Stable.

NEW YORK -- Fitch Ratings has affirmed the outstanding credit and Issuer Default Ratings (IDRs) of AGL Resources, Inc. (AGLR) and its two debt issuing subsidiaries Atlanta Gas Light Co. (AGLC) and AGL Capital Corp.(AGCC), as listed below. The Rating Outlook is Stable. Approximately $1.4 billion of outstanding long-term 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 growing portfolio of non-utility businesses, and continued stability in key consolidated debt leverage and coverage ratios.

Considerable credit strength is derived from AGLR's stable regulated gas distribution operation which serves more than 2.2 million customers located primarily in Georgia, New Jersey, and southeastern Virginia. These operations contributed roughly 70% of 2005 operating income. AGLC (IDR rated 'A-' by Fitch), 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 have minimal financial impact. In addition, the adoption of weather normalized rates in AGLR's Virginia and New Jersey jurisdictions adds further predictability to gas distribution segment performance. Moderate credit concerns related to the gas distribution segment include heavy capital spending requirements associated with above average service territory growth and temporary working capital strains resulting from higher natural gas supply costs. In addition, a pending rate case at AGLR's Virginia jurisdiction (approximately 15% of segment operating income) could modestly influence future utility segment returns.

AGLR's non-utility business strategy is focused primarily on retail gas marketing in Georgia and providing wholesale gas services through its Houston based Sequent Energy division and Jefferson Island gas storage facility located near the Henry Hub in Louisiana. Capital spending to maintain these businesses remains relatively modest and non-utility activities continue to generate economic value for AGLR in the form of cash dividends and/or earnings. In addition, Sequent's trading strategy remains focused on primarily managing and optimizing excess upstream pipeline capacity and natural gas supply on behalf of AGLR's utility affiliates. Furthermore, Sequent's overall risk parameters, including portfolio tenor and risk tolerance, remain at relatively conservative levels.

Consolidated credit measures have remained consistent with AGLR's ratings following the Nov. 2004 acquisition of NUI Corp. In addition, to the successful integration of NUI, solid performance at AGLR's non-utility businesses contributed an improvement in cash flow based leverage metrics. For the fiscal year ended Dec 31, 2005, AGLR's adjusted consolidated debt to EBITDA approximated 3.5 times (x) with cash flow coverage of fixed charges of about 4.7x. These ratios approximated 4.2x and 5.4x, respectively, at year-end 2004 following the NUI acquisition.

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 $1.7 billion as of Dec. 31, 2005. Although AGLC's standalone credit ratios have strengthened considerably 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 ratings are affirmed by Fitch:

AGL Resources, Inc.

-- Issuer Default Rating (IDR) 'A-'.

AGL Capital Trust I

-- $75 million trust preferred securities 'BBB+'.

AGL Capital Trust II

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

Atlanta Gas Light Co.

-- Issuer Default Rating (IDR) 'A-';

-- $208 million outstanding medium term notes 'A'.

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

-- Issuer Default Rating (IDR) 'A-';

-- $975 million outstanding senior notes 'A-';

-- Commercial paper 'F2'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.