Fitch Ratings Downgrades Cedar Brakes I & II to 'BBB+'.CHICAGO -- 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. has downgraded to 'BBB+' from 'A-' the ratings on the following securities: --Cedar Brakes I, LLC's 8.5% series C senior secured bonds due 2014; --Cedar Brakes II, LLC's 9.875% series C senior secured bonds due 2013; --Cedar Brakes II, LLC's 9.875% series B senior secured bonds due 2013. The rating downgrade of the Cedar Brakes I and Cedar Brakes II (the projects) bonds is due to a weakening of Constellation Energy Constellation Energy (NYSE: CEG), headquartered in Baltimore, Maryland, generates, trades, supplies, and distributes energy. The company operates over 35 power plants in 11 states (mainly Maryland, Pennsylvania, New York, West Virginia, and California) under its operating Group's (CEG (Continuous Edge Graphics) A VGA RAMDAC chip from Edsun Labs that adds anti-aliasing on the fly. It can also calculate intermediate shades, thus providing thousands of colors on an 8-bit board that normally generates only 256 colors. ) credit quality. CEG's issuer default rating has been downgraded to 'BBB+' from 'A-', reflecting the anticipated credit deterioration of CEG's subsidiary, Baltimore Gas & Electric, and the increased uncertainty regarding legislative and regulatory developments in Maryland. CEG's Evolving Rating Outlook reflects a number of possible scenarios that have divergent outcomes, including the completion of the pending merger with FPL Group; the termination of the merger; and various legislative and settlement possibilities. Due to the structural balance of the power purchase agreements (PPAs), the projects' risk exposure is limited to Public Service Electric and Gas Company's (PSE&G) ability to make payments under the amended and restated PPAs and of CEG's unconditional guarantee of Constellation Energy Commodities Group, Inc.'s (CECG CECG Combined Exercise Control Group ) performance under the mirror PPAs. Accordingly, the rating of the bonds is constrained by the lower counterparty credit rating of PSE&G or CEG. The projects purchase energy from CECG, an affiliate of CEG, and resell that energy to PSE&G (issuer default rating of 'BBB+' by Fitch) under long-term contracts. Both projects are bankruptcy-remote, indirectly owned subsidiaries of Bear Stearns The Bear Stearns Companies, Inc. (NYSE: BSC) is the parent company of Bear, Stearns & Co. Inc., one of the largest global investment banks and securities trading and brokerage firms in the world. (issuer default rating of 'A+' by Fitch). Fitch views the credit quality of each project as independent from the credit quality of its owner. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. 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 Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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