Fitch Places CMS Energy and Consumers Energy on Rating Watch Positive.

CHICAGO -- Fitch has placed the ratings of CMS Energy Corp. (CMS) and its electric and gas subsidiary, Consumers Energy Co. (Consumers) on Rating Watch Positive. The rating action follows today's announcement that CMS has reached an agreement to sell the international assets of its subsidiary CMS Generation Co. to Abu Dhabi National Energy Company for $900 million, including the assumption of $104 million of debt. CMS Generation Co. has ownership interests in businesses in the Middle East, Africa and India. Approximately $7.1 billion of CMS and Consumers debt is affected by the rating action.

The following ratings are placed on Rating Watch Positive:

CMS

--Issuer Default Rating (IDR) 'B+';

--Senior secured bank loan 'BB+/RR1';

--Senior unsecured debt 'BB-/RR3';

--Preferred stock 'B-/RR6';

Consumers

--IDR 'BB-';

--Senior secured debt 'BBB-';

--Senior secured second lien bank credit facility 'BB+';

--Senior unsecured debt 'BB';

--Preferred stock 'BB-'.

CMS Energy Trust I

--Preferred stock 'B-/RR6'.

Consumers Energy Financing I

--Preferred stock 'BB-'.

The businesses being sold include the Al Taweelah A2 and the Shuweihat S1 facilities in the United Arab Emirates, the Jorf Lasfar Energy Company in Morocco, the Jubail Energy Company in Saudi Arabia, the Takoradi International Company in Ghana, and the ST CMS Company in Neyveli, India. The sale does not include CMS' non-utility electric generating plants in North America and previously announced asset sales. Assuming all necessary consents are received, the sale is expected to be completed in the middle of 2007. Proceeds from the transaction will be to retire $550 million of CMS parent company debt and for general corporate purposes, including a $350 million investment in Consumers.

Fitch views the sale, in conjunction with the recent sale of several assets in Latin America, as favorable for credit quality. While CMS will no longer benefit from the cash distributions and earnings from the assets, approximately $114 million annually, consolidated business risk would be significantly lowered as a result of the transaction. Additionally CMS' credit metrics and capital structure are projected by Fitch to improve over the longer term following the paydown of parent company debt with a portion of the proceeds, as well as the absence of related CMS Generation Co. obligations, parent overhead and interest expense. Due to the expected improvement at CMS, the ratings at Consumers will be more reflective of its standalone credit profile and may result in a multiple notch upgrade that could bring its senior unsecured rating to the investment grade category. The Rating Watch will remain in effect over the next several weeks following an update meeting with management and a comprehensive review of the company.

CMS is a utility holding company whose primary subsidiary is Consumers, which provides natural gas and electricity to nearly 6.5 million customers in Michigan. CMS also has operations in natural gas pipeline systems and independent power generation.

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.