Fitch Revises Constellation's Outlook To Stable on Merger Termination; Affirms 'BBB+' IDR.

CHICAGO -- Fitch Ratings has affirmed the 'BBB+' Issuer Default Ratings (IDR) of both Constellation Energy Group (CEG) and subsidiary Baltimore Gas & Electric Co. following the announcement of the termination of the merger agreement with FPL Group, Inc. (FPL). Fitch has also revised the Rating Outlook for CEG to Stable from Evolving. BGE's Rating Outlook remains Negative.

CEG's Stable Rating Outlook reflects the strength of the cash flows from its subsidiaries, particularly the robust contracted cash flows from its merchant generation business, as well as adequate liquidity for its competitive wholesale and retail energy operations. Fitch expects that cash flows from the merchant generation fleet, largely hedged through 2008, will provide an increasing percentage of consolidated cash flows. Fitch anticipates that BGE's cash flow contribution will weaken substantially through May 2007 due to the effects of the utility's recent electric rate stabilization plan, but BGE is expected to continue to support its own obligations comfortably and is not expected to require parent company support. A new $1 billion credit facility triggered by the merger termination agreement will increase CEG's available liquidity to an estimated $2.7 billion, which is adequate to support CEG's unregulated operations under Fitch's stress scenarios. The Stable Outlook also incorporates Fitch's expectation that CEG will use proceeds from the sale of generation assets to reduce outstanding debt.

BGE's ratings are consistent with the nature of its regulated transmission and distribution business. The ratings and Negative Rating Outlook also incorporate increased regulatory risk associated with the Maryland jurisdiction and Fitch's expectation that BGE will amass substantial deferred purchased power expenses prior to approximately June 2007. In Fitch's view, legislative and regulatory developments in Maryland during 2006 resulted in uncertainty about the full and timely recovery of the company's costs. BGE's cash flow and credit metrics are expected to deteriorate until the company completes a securitized debt issuance related to the energy deferrals, which may occur no sooner than early 2007. Although unexpected, an inability to complete such a securitization could result in a negative rating action. Over the longer-term, while BGE's ratio of debt to operating cash flow and cash flow interest coverage are expected to weaken under the rate stabilization plan, Fitch expects that BGE will ultimately recover its deferred costs and restore its operating cash flow trends.

Fitch expects to resolve the Negative Rating Outlook for BGE once there is greater clarity on the long-term composition of the PSC, its willingness and ability to allow BGE timely cost recovery and the ultimate impact on BGE's long-term financial profile.

Fitch has affirmed the following ratings:

Constellation Energy, Inc.

--Issuer default rating (IDR) 'BBB+';

--Senior unsecured notes 'BBB+';

--Commercial paper 'F2';

--Rating Outlook revised to Stable from Evolving.

Baltimore Gas and Electric Company

--Issuer default rating (IDR) 'BBB+';

--First-mortgage bonds 'A';

--Medium-term notes 'A-';

--Unsecured pollution control revenue bonds 'A-';

--Preferred stock 'BBB+';

--Commercial paper 'F2';

--Rating Outlook remains Negative.

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.