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Fitch Affirms Constellation Energy & Baltimore Gas & Electric on Maryland Settlement.

NEW YORK -- Fitch Ratings has affirmed the Issuer Default Rating (IDR) and other ratings of Constellation Energy Group, Inc. (CEG; 'BBB+') and Baltimore Gas and Electric Company (BGE; 'BBB+') and removed the ratings from Rating Watch Negative, upon the passage of legislation by the Maryland General Assembly approving the settlement between the two companies and the State of Maryland and the Maryland Public Service Commission. The governor of Maryland supports the settlement and is expected to sign the legislation. Fitch had placed the companies on Rating Watch Negative on Feb. 1, 2008 after the political and regulatory environment became more contentious, which elevated the risk profile and operating environment for the two companies.

In Fitch's view, the settlement resolves most of the outstanding legal and regulatory issues, and signals the potential for a more constructive regulatory and political environment going forward. The settlement will have a net cash impact on BGE of approximately $143 million, consisting of a $187 million refund offset by recovery of various costs totaling $44 million. While this places mild downward pressure on credit metrics, Fitch expects that they will remain within parameters for the current rating category.

Fitch currently rates the companies as follows, with a Stable Outlook:

Constellation Energy Group, Inc.

--IDR 'BBB+';

--Short-term IDR 'F2';

--Senior unsecured notes 'BBB+';

--Commercial paper 'F2'.

Baltimore Gas and Electric Company

--IDR 'BBB+';

--Short-term IDR 'F2';

--First-mortgage bonds 'A';

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

--Preferred stock 'BBB+';

--Commercial paper 'F2'.

BGE Capital Trust II

--Preferred stock 'BBB+'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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.
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Publication:Business Wire
Date:Apr 8, 2008
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