Fitch Rates AEP Texas Central's Senior Notes 'A-'.Business Editors NEW YORK--(BUSINESS WIRE)--Oct. 28, 2003 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. assigns an 'A-' rating to Matagorda County Navigational District Number One (Texas) pollution control revenue refunding bonds refunding bond A bond that is issued for the purpose of retiring an outstanding bond. Issuers refund bond issues to reduce financing costs, eliminate covenants, and alter maturities. See also crossover refunding bonds, prerefunding. (Central Power and Light Company Project), series A $111,700,000 and series B $50,000,000 due 2030 (the Bonds). Principal and interest on the bonds are secured by a pledge of payments to be made to Matagorda County (the county) under the terms of an Agreement of Sale between the county and AEP AEP - Application Environment Profile Texas Central Company (Texas Central), formerly known as Central Power and Light Company. Fitch rates Texas Central's outstanding senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. 'A-'. The notes are unsecured obligations and rank pari passu [Latin, By an equal progress; equably; ratably; without preference.] Used especially to describe creditors who, in marshalling assets, are entitled to receive out of the same fund without any precedence over each other. PARI PASSU. By the same gradation. with Texas Central's other unsecured debt. The Bonds refinance bonds originally issued in 1999 which were rated one notch ('BBB+') below that of Texas Central's senior unsecured rating due to the company's ability to assign the bonds to any AEP affiliate with an investment grade rating (BBB- or higher). The bond documents for the refunding Bonds only permits the assignment of the Bonds to an entity that owns substantially all of the transmission and distribution assets of Texas Central. Fitch deems the operation of the transmission and distribution assets to be the core business of Texas Central and the Bonds will remain the obligation of Texas Central or its successor. The ratings take into consideration Texas Central's moderate leverage and strong cash flow as well as its historically slow growth service territory. The risk profile of Texas Central has decreased through the sale of its retail electric provider business to Centrica and will decline further if it successfully completes its plans to sell all of its generating assets. Texas Central's credit profile is further enhanced by it affiliation with its parent, American Electric Power American Electric Power (NYSE: AEP) is a major investor-owner electric utility in various parts of the United States. It is headquartered in Columbus, Ohio. It serves parts of 11 states, and is currently the largest electricity generating utility in the United States. Co, Inc. (AEP) which enables the company to participate currently in the AEP power pool and to benefit from its financial expertise. Texas Central is a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of the American Electric Power Co., Inc. (AEP) and is engaged in the generation, transmission and distribution of electric power to 680,000 retail customers in south central Texas. |
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