Fitch Rates AES Secured Debt 'BB'; Affirms Existing Ratings.

    Business Editors

    NEW YORK--(BUSINESS WIRE)--Jan. 28, 2003--Fitch Ratings has
assigned a 'BB' rating to The AES Corp's (AES) recently completed
secured debt refinancing (secured debt) comprised of a multi-tranche
$1.62 billion senior secured credit facility and $258 million of
secured notes. Fitch has also affirmed the existing ratings of AES and
those of its subsidiaries, IPALCO Enterprises (IPALCO) and
Indianapolis Power and Light (IP&L). AES, IPALCO, and IP&L's ratings
are removed from Rating Watch Negative. The Rating Outlook is
Negative. CILCORP and Central Illinois Light Company's (CILCO) ratings
remain on Rating Watch Evolving pending completion of their committed
sale to Ameren Corporation. The CILCORP sale is now awaiting final SEC
approval.
    The newly assigned rating of AES's secured debt reflects the
strong asset coverage, net of AES subsidiaries' individual debts,
afforded by the security package and the stringent terms and
conditions that govern the bank credit agreement and secured notes
indenture. The ratings of the various secured debt instruments do not
differentiate among the various tranches that enjoy varying baskets of
collateral since in Fitch's view all have reasonably strong recovery
prospects. All secured debtholders benefit from a fixed amortization
schedule that requires AES to pay down 50% of the secured credit
facility and 40% of the secured notes by November 2004. They are also
advantaged by a cash sweep mechanism that requires AES to use a
significant portion of proceeds from asset sales to pay down the
secured debt. Fitch projects a breakeven liquidity scenario in which
AES meets the fixed amortization schedule with proceeds from the
CILCORP sale, a slightly reduced forecast of parent operating cash
flow (POCF) relative to that of 2002, and a much reduced capital
investment schedule. Any additional funding, either via asset sales or
access to capital markets, would improve AES's liquidity position and
allow the company to pay down debt and strengthen its balance sheet.
    AES' affirmed ratings already reflect the effective subordination
of AES' senior unsecured debt and the explicit subordination of more
junior debt and preferred classes as a result of the creation of a
secured debt category. The ratings also consider the relatively thin
residual asset coverage, afforded to the existing unsecured and
subordinate debt classes after the expected repayment of the senior
secured debt. The ratings are also influenced by the current high
degree of debt leverage, as indicated by the ratio of Parent Debt to
POCF ratio expected to be in the 7.5-8.0 times (x) range and POCF to
Parent-Interest ratio around 1.5x.
    The Negative Outlook takes into consideration the continuing
uncertainties AES faces. The company still encounters a difficult
business environment in its key geographic regions such as the US, UK
and Latin America. Fitch's current forecasts do not anticipate that
AES will receive much of any contribution of POCF in the next two
years from Brazil, Venezuela, and the UK. AES must manage it's
portfolio of businesses in these as well as other regions for optimal
operations as well as to ensure its compliance with its corporate debt
covenants. Furthermore, AES' ability to pay down debt beyond the
required debt maturities and improve its credit metrics will depend on
the timing and execution of its asset sale program. In addition, if
AES is able to issue equity or equity-related instruments, it will be
relieved from the pressure to sell assets and preserve future cash
flow foregone from asset sales. Barring any further unforeseen
deterioration in AES businesses worldwide, the company's credit
metrics could stabilize and see potential for slight improvement in
late 2003 or early 2004.
    The following ratings are affirmed and removed from Rating Watch
Negative:
-0-
*T
AES

--Senior secured credit facility 'BB';

--Senior secured notes 'BB';

--Senior unsecured debt 'B';

--Senior and junior subordinated debt 'B-';

--Trust preferred convertibles (AES Trust III and AES Trust VII)
'CCC+';

--Senior unsecured bank facility withdrawn;

--Rating Outlook Negative.

IPALCO

--Senior unsecured debt 'BB';

--Rating Outlook Negative.

IP&L

--First mortgage bonds and secured pollution control revenue bonds
'BBB-';

--Senior unsecured debt 'BB+';

--Preferred stock 'BB+';

--Rating Outlook Negative.

The following ratings remain on Rating Watch Evolving:

CILCORP

--Senior unsecured debt 'BBB-';

--Rating Watch Evolving pending consummation of sale of CILCORP to
Ameren.

CILCO

--First mortgage bonds and secured pollution control revenue bonds
'BBB';

--Senior unsecured debt 'BBB-';

--Preferred stock 'BBB-';

--Commercial paper 'F2';

--Rating Watch Evolving.

    The AES Corp., founded in 1981, is among the world's largest power
developers. It generates and distributes electricity and is also a
retail marketer of heat and electricity. AES owns or has an interest
in 182 plants, with more than 63,000 megawatts, in 31 countries and
also distributes electricity in 11 countries through 21 distribution
companies.

    --30--eb/sf*

    CONTACT: Fitch Ratings
             Mona Yee, CFA 1-212-908-0557
             Ellen Lapson, CFA 1-212-908-0504, New York
             James Jockle, 1-212-908-0547, New York, Media Relations

    KEYWORD: NEW YORK
    INDUSTRY KEYWORD: BANKING BOND/STOCK RATINGS
    SOURCE: Fitch Ratings