Fitch Rates CMS Energy's $150MM Senior Note Issuance 'B+'; Outlook Positive.

CHICAGO -- Fitch has assigned a 'B+' rating to CMS Energy Corp.'s $150 million issuance of 6.30% senior unsecured notes, due 2012. Proceeds from the issuance will be used to refinance higher cost debt and for general corporate purposes. The Rating Outlook is Positive.

The current ratings for CMS take into consideration the reduced business risk, improved access to capital markets, and lower levels of parent and consolidated debt as a result of management actions over the past two years. The ratings also recognize CMS' ownership of a regulated utility, Consumers Energy (Consumers, senior secured rating of 'BBB-', Stable Outlook by Fitch). CMS is strongly dependent on cash flow from Consumers to service parent debt obligations. Consumers benefits from relatively stable and predictable cash flows, as well as sound electric and gas distribution franchises. Additionally, Fitch views the regulatory environment in Michigan to be relatively constructive, as evidenced by recent final orders from the Michigan Public Service Commission (MPSC) on several rate proceedings. These orders are expected to have a slightly positive impact on the utility.

The Positive Outlook for CMS reflects the improvement in CMS' financial profile due to lower parent debt levels and an improved liquidity position, with no material debt maturities through 2006. Events that could result in further positive rating action include the ability to demonstrate continued improvement in the ratio of consolidated debt to cash flow from operations and further parent debt reduction. Events that could adversely affect ratings include credit deterioration at Consumers or the inability to refinance maturing CMS parent debt. Fitch notes that CMS will be dependent on additional asset sales or accessing capital markets to refinance a part of the sizable debt maturing 2007 and 2008, when $468 million and $410 million of parent debt becomes due, respectively.

On Jan. 12, 2005, CMS announced it will record a $45 million pretax, $29 million after-tax, liability for its environmental obligations associated with the Bay Harbor development project in the fourth quarter of 2004. Bay Harbor is a residential/commercial real estate project developed on the site of a discontinued cement plant and quarry operation in Michigan. CMS sold its interest in Bay Harbor in October 2002 but retained the environmental responsibilities of the project. Environmental issues surrounding the project primarily relate to the level of pH in the near-by Lake Petoskey. Additionally, CMS announced that it will record an impairment charge of $19 million, net of deferred income taxes, in the fourth quarter of 2004, related to the sale of GVK Industries Ltd. in India. CMS announced the sale of its 33% interest in the GVK facility, a 240 mw power plant, in February 2004 for approximately $25 million.

Additionally, Consumers recently announced that the Palisades nuclear plant had an unscheduled outage due to a vacuum reduction in the main condenser. The company is in the process of determining the specific source of the vacuum reduction; once the source has been identified, any necessary repairs are expected to be made within several days and the plant will return to service shortly thereafter. Consumers has also taken Unit 3 of the Campbell Plant offline to repair what is believed to be a tube leak in the super heater portion of the boiler. The company expects the leak to be repaired within a week after determining the source of the leak. Consumers expects to have sufficient power at all times to meet its load requirements from its other plants and from purchase arrangements. These arrangements could increase the cost of power by an estimated $1.1 million (pretax) per day in the aggregate, of which approximately $440,000 per day is not recoverable from ratepayers.

CMS is a utility holding company whose primary subsidiary is Consumers, a regulated electric and gas utility serving more than 3.4 million customers in western Michigan. CMS also has operations in natural gas pipelines and independent power production.