Fitch Rates FPL Group Capital's Enhanced Junior Subordinated Debentures 'A-'.

NEW YORK -- Fitch has rated FPL Group Capital Inc's (Group Capital) ratings as follows:

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

--$350 million issuance of 6.60% Enhanced Junior Subordinated Debentures Series A due Oct. 1, 2066 (Series A debentures) 'A-';

--$350 million issuance of 6.35% Enhanced Junior Subordinated Debentures Series B due Oct. 1, 2066 (Series B Debentures) 'A-'.

The Rating Outlook for Group Capital is Stable.

Proceeds from the issuance will be added to its general funds. The debentures are fully and unconditionally guaranteed on a subordinated (Subordinated Guarantee) basis by parent company FPL Group, Inc. (FPL, IDR 'A'). The Series A Debentures and the Series B Debentures will rank junior and be subordinated in right of payment and upon liquidation to all of Group Capital's senior indebtedness, and FPL payment obligation under the Subordinated Guarantee will rank junior and be subordinated in right of payment and upon liquidation to all of FPL Group's senior indebtedness.

The ratings of FPL reflect the strong financial profile and growing customer base of FPL's primary subsidiary, Florida Power and Light Company (FP&L, IDR 'A'). A source of concern is the potential shift in the regulatory environment in Florida. Historically, the Florida Public Service Commission (FPSC) had been very constructive. However, in an order relating to recovery of 2005 storm damage costs issued in May 2006, the FPSC applied a different standard for recovery than in the 2004 proceeding and accordingly, made certain adjustments and disallowances to the amount sought for recovery. This change in standard, among other things, reduced FPL's net income by approximately $28 million, net of interest. While the magnitude of the adjustments and disallowances was not large as compared to the company's overall operations, Fitch is concerned that they are harbingers of a change in regulatory sentiment at the FPSC.

Group Capital is a holding company for all of FPL's non-regulated activities, the largest of which is its non-regulated electric generation activities (FPL Energy). FPL Energy owns approximately 13,000 net MW of generation across the spectrum of fuel types and is the largest developer and owner of wind power in the U.S. FPL also owns a small telecommunications subsidiary (FPL FiberNet) which leases wholesale fiber-optic network capacity and dark fiber to FP&L and other customers.

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.