Fitch Rts City of Indianapolis, Indiana Thermal Energy Sys `A-'.

Business Editors

NEW YORK--(BUSINESS WIRE)--Jan. 12, 2001

Fitch assigns an 'A-' rating to the City of Indianapolis, Indiana Thermal Energy System's proposed $120 million revenue bonds, series 2001A. The Rating Outlook is Stable. The series 2001A bonds are scheduled to price the week of Jan. 15, with Morgan Stanley Dean Witter acting as lead underwriter.

The City of Indianapolis, Indiana's Thermal Energy System appears to be well positioned to provide utility customers with a diversity of energy services at competitive prices. The acquisition of the steam and chilled water businesses from the Indianapolis Power & Light Company (IPALCO), together with the city's existing natural gas system, should result in greater operating synergies and provide increased opportunities to meet the needs of an expanding community. Factors supporting the rating include a strong and vibrant economy, utility services that are priced below most alternative energy options, and favorable expansion opportunities for the chilled water division. Solid financial ratios, with debt service coverage of first lien bonds forecast near 3.0 times (x), represent another strength. Credit concerns focus on the competitive nature of the chilled water and steam businesses, limited term contracts, the short history of the thermal system as part of the city's utility operations, and significant customer concentration. However, major customers are of high quality credit.

No rating was requested for the series 2001B $50 million auction-rates notes (multi-mode revenue bonds). Most of the proceeds from the series A and series B bonds will be used to pay off $151.63 million certificate of indebtedness notes on May 1, 2001. The series 2001A bonds are first lien bonds under the master indenture and will be paid before the series 2001B bonds are paid. There will be a common debt service revenue fund.