S&P: AES Still on Watch; IPALCO Lwrd, on Watch Pos.

Business Editors

NEW YORK--(BUSINESS WIRE)--Standard & Poor's

March 27, 2001--Standard & Poor's double-'B' corporate credit and senior unsecured debt ratings on The AES Corp. (AES), single-'B'-plus rating on AES' subordinated debt, and single-'B' rating on the company's trust preferred securities remain on CreditWatch with positive implications pending further review and information from the company following AES' acquisition of IPALCO Enterprises Inc. (IPALCO). Standard & Poor's expects to address the CreditWatch status in the next two weeks.

Also, Standard & Poor's lowered its corporate credit ratings on IPALCO to triple-'B' from single-'A'-plus, and IPALCO's subsidiary, Indianapolis Power & Light Co. (IPL), to triple-'B' from double-'A'-minus, and revised the CreditWatch implications to positive from negative. The CreditWatch with positive implications mirrors AES. (See list below for other rating actions related to IPALCO and IPL.)

In addition, Standard & Poor's revised its CreditWatch implications on the ratings of AES subsidiaries CILCORP Inc. and Central Illinois Light Co. (CILCO) to developing from positive pending AES' decision as to how it will restructure its interest in CILCORP. Developing implications indicate that CILCORP's and CILCO's ratings may be raised, lowered, or affirmed.

While IPALCO's stand-alone credit quality is stronger than the company's triple-'B' corporate credit rating would indicate, the rating downgrade is directly attributable to the acquisition of IPALCO by AES. In most circumstances Standard & Poor's will not rate the debt of a wholly owned subsidiary higher than the rating of the parent. Exceptions can be made, however, on the basis of the cumulative value provided by enhancements such as structural protections, covenants, a pledge of stock, and an independent director. AES has indicated its willingness to put such enhancements in place in a timely manner, and maintenance of the rating is dependent upon the satisfactory documentation of these enhancements.

IPALCO's strong stand-alone credit quality reflects an above-average business position and robust financial measurements. Standard & Poor's ratings, however, of individual entities within AES are a function of AES, whose consolidated financial profile is significantly weaker than that of IPALCO and other utility-related companies.

While there is no debt currently at IPALCO, any prospective debt issuances would be viewed as structurally subordinated to IPL and consequently would be notched down from the corporate credit rating of IPL.

The revision to CILCORP's CreditWatch status reflects management's consideration of alternative strategies with respect to its ownership interest in CILCORP. For AES to preserve its status as an exempt holding company under the Public Utility Holding Company Act of 1935 following its acquisition of IPALCO, it must restructure its ownership interest in CILCORP. AES' options include selling CILCO's transmission and distribution assets; an outright sale of the entire company, including its generation assets; and/or some type of sale-leaseback arrangement. The key considerations in the credit analysis will be the ownership and capitalization structure of the reorganized company, Standard & Poor's said. -- CreditWire

RATINGS REMAIN ON CREDITWATCH POSITIVE
                                            RATING
The AES Corp.
  Corporate credit rating                     BB
  Senior unsecured debt                       BB
  Preferred stock                             B
  Subordinated debt                           B+

RATINGS LOWERED, ON CREDITWATCH POSITIVE

                                             RATING
                                          TO        From
IPALCO Enterprises Inc.
  Corporate credit rating                 BBB         A+
  Commercial paper                        A-2         A-1
  Bank Loan                               BBB-        A+

Indianapolis Power & Light Co.
  Corporate credit rating                 BBB         AA-
  Senior secured debt                     BBB         AA-
  Senior unsecured debt                   BBB-        A+
  Commercial paper                        A-2         A-1+
  Preferred stock                         BB+         A
  Shelf senior secured debt/
    preferred stock (prelim)             BBB/BB+    AA-/A


RATINGS PLACED ON CREDITWATCH DEVELOPING

CILCORP Inc.
  Corporate credit rating                     BBB-
  Senior unsecured                            BB+

Central Illinois Light Co.
  Corporate credit rating                     BBB-
  Senior secured debt                         BBB-
  Preferred stock                             BB