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INDIANA MICHIGAN POWER 'BBB+' FIRST MORTGAGE BONDS AFFIRMED BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, April 15 /PRNewswire/ -- Indiana Michigan Power Co.'s (I&M) $671 million "BBB+" first mortgage bonds are affirmed by Fitch. Also affirmed are the company's $6 million "BBB" sinking fund debentures, $197 million "BBB" preferred stock, and "F-2" commercial paper. The credit trend is stable.
 The ratings of this American Electric Power Co. subsidiary reflect the liberal use of debt, including leverage lease financing and purchased power, and the company's inability to fully recover its costs related to the Rockport Unit 2 coal fired generating plant. However, parent company support, the AEP system power pool, manageable construction requirements, and competitive costs enhance overall credit quality.
 Rockport Unit 2 was completed in 1989. Upon commercial operation, the plant was sold and leased backed in a transaction yielding about $850 million ($661 million after taxes). Most of the sale/leaseback proceeds, or $400 million, redeemed long term debt, but this direct debt reduction was offset by an approximately $700 million off-balance sheet long term operating lease obligation.
 Due to its large reserve margin and AEP's expectation that about 500 megawatts of Rockport would be sold through then-identified off-system transactions, in the 1990 Indiana jurisdiction rate case, I&M sought only partial recovery of its Rockport costs. However, soft bulk power market conditions precluded the wholesale arrangements. Consequently, not all, but most, Rockport related rent and operating costs have been recovered through rate making ($23 million awarded in 1990) and AEP power pool capacity credits.
 Prospectively, I&M is not adding base load generating capacity and Clean Air Act compliance costs are modest. The company's $44.8 million retail rate filing in Indiana is primarily related to higher nuclear operating costs experienced at the huge (2,110 megawatt) Donald C. Cook station. I&M's operating income before taxes will remain stable around $265 million and pretax interest coverage excluding AFUDC is expected at slightly above 3.0 times (x). Leverage, adjusted to include I&M's portion of the Rockport lease, is forecast at 64 percent of total capitalization. Given I&M's moderate construction requirements, cash flow should be sufficient to fund all, or most, of the expenditures.
 -0- 4/15/94
 /CONTACT: John Watt of Fitch, 212-908-0523/
 (AEP)


CO: Indiana Michigan Power Co. ST: IN: UTI SU: RTG

TS -- NY106 -- 6427 04/15/93 16:11 EDT
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Date:Apr 15, 1993
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