Fitch Ratings Affirms CMS Energy & Consumers Energy.

Business Editors

CHICAGO--(BUSINESS WIRE)--April 23, 2003

Fitch Ratings has affirmed the existing ratings of CMS Energy Corp. (CMS) and its primary subsidiary, Consumers Energy Co. (Consumers), and removed the ratings from Rating Watch Negative, where they were placed on July 17, 2002. Approximately $7.5 billion of debt is affected. The ratings for CMS are as follows: senior unsecured rating at 'B+', and preferred stock and trust preferred securities at 'CCC+'. In addition, Fitch has assigned a senior secured rating of 'BB-' to CMS' $925 million of secured bank facilities. The Rating Outlook for CMS is Negative. The ratings affirmed for Consumers are: senior secured debt at 'BB+', senior unsecured debt at 'BB', and preferred stock and trust preferred securities at 'B'. The 'B' trust preferred rating of Consumers Power Financing Trust I has also been affirmed. The Rating Outlook for Consumers is Stable. A detailed description of the rating actions is shown below.

The rating affirmations follow recent positive actions taken by CMS to improve its liquidity and business position. Resolution of these steps has removed a number of proximate negative pressures on the parent company's ratings, allowing Fitch to replace the Rating Watch Negative with a Negative Outlook. These include a definitive agreement to sell the Panhandle Companies to Southern Union Co. (rated 'BBB'/Rating Outlook Stable by Fitch) for $1.828 billion, the successful refinancing of $1.465 billion of bank facilities and the release of audited annual financial restatements. Importantly, the bank agreements reduce near-term liquidity pressures on CMS, and should enable the company to meet all its debt maturities through October 2004. The Negative Outlook for CMS takes into consideration the continuing uncertainty surrounding the company's projected business strategy. CMS is reliant upon the timing and execution of its remaining asset sale program to pay down debt beyond the required maturities and improve credit metrics. Although, with the successful completion of the Panhandle transaction, as well as those domestic asset sales already announced and in an advanced stage of realization, CMS will have completed the bulk of its 2003 plan, the company still faces a difficult economic and market environment for the sale of its international assets, primarily in Latin America, the Middle East and Asia, slated for disposal by late 2004. Additional rating concerns include the potential financial impact of ongoing regulatory and governmental investigations related to wash-trades conducted by CMS' trading business, which is in the process of wind-downing operations, in 2000-2001.

Stabilization of CMS' Rating Outlook will depend on further progress towards the execution of the planned asset sales program, as well as reduction in parent company debt and resolution of pending regulatory investigations and inquiries. In the long-term, improvement in the parent company's credit profile will depend on CMS' ability to generate free operating cash flow, maintain adequate liquidity, reduce leverage and demonstrate improved credit protection measures.

On a standalone basis, Consumers' credit profile is solid relative to the current ratings which reflect constraint due to ownership linkage to CMS. Despite an increasing investment burden over the next few years, the regulated utility benefits from more stable cash flows and electric and gas monopoly distribution franchises. Current credit concerns at the regulated utility level primarily relate to Consumers' full regulatory agenda in 2003, which includes a $1.08 billion securitization request, a $156 million gas rate case, and ongoing stranded cost proceedings. While certain items within the regulatory rate submission, such as securitization of environmental costs, are less controversial than others, such as the securitization of pension costs, Fitch notes that the inability to receive nominal base rate increases may place pressure on Consumers' financial condition. Following the completion of the Panhandle transaction, CMS will be almost entirely dependent on cash distributions from Consumers for debt service. As a result, Fitch believes that further improvement in Consumers' ratings will be largely dependent on the stabilization of CMS' credit quality. The current ratings of Consumers nonetheless maintain room to permit further modest rating deterioration at the CMS level without negative rating action at the regulated subsidiary, and thus a Stable Rating Outlook has been assigned.

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

New Ratings:

CMS Energy Corp.

-- Senior secured debt 'BB-'

Ratings removed from Rating Watch Negative and affirmed:

CMS Energy Corp.

-- Senior unsecured debt 'B+';

-- Preferred stock/trust preferred securities 'CCC+';

-- Rating Outlook Negative.

Consumers Energy Co.

-- Senior secured debt 'BB+';

-- Senior unsecured debt 'BB';

-- Preferred stock/trust preferred securities 'B';

-- Rating Outlook Stable

Consumers Power Financing Trust I

-- Trust preferred securities 'B';

-- Rating Outlook Stable.