Moody's Upgrades Outlook for UI Security Ratings; Also Assigns First Baa1 Issuer Rating to UIL Holdings Corp

Business Wire, Sept 5, 2000

Business Editors

NEW HAVEN, Conn.--(BUSINESS WIRE)--Sept. 5, 2000

Moody's Investors Service has changed the outlook for the ratings of The United Illuminating Company's (UI) securities to positive from stable, largely reflecting the recent announcement that the Millstone nuclear plants, including UI's share of Millstone Unit 3, would be sold to Dominion Resources.

At the same time, Moody's assigned a Baa1 issuer rating with a positive outlook to UIL Holdings Corporation, the recently formed holding company for UI and United Resources, Inc. (URI), a non-regulated business unit of UIL Holdings that serves as a holding company housing UIL Holdings' non-regulated business investments.

Moody's noted, "From a financial perspective, UI's management has prudently utilized proceeds from non-nuclear generation asset sales to strengthen its balance sheet and shore up its interest coverage ratios. Prospectively, Moody's expects that UI's financial performance will allow it to achieve a common equity ratio of about 48%, while generating funds from operations that will cover interest expense by over four times."

This follows Moody's upgrade in June of UI's long-term debt to A3 from Baa1, reflecting the success that UI has achieved in transferring the price and volume risks associated with its role as supplier of last resort in the competitive retail electric market in Connecticut.

UIL Holdings Corporation is the holding company for The United Illuminating Company and United Resources Inc. UI is a New Haven-based regional distribution utility that provides electricity and energy-related services to more than 314,000 customers in municipalities in the Greater New Haven and Greater Bridgeport areas. URI is the umbrella for UIL Holdings' non-regulated business units, including Xcelecom, American Payment Systems, United Capital and United Bridgeport Energy. UIL Holdings World Wide Web address is www.uil.com and the company is traded on the New York Stock Exchange under the symbol UIL.

For more information on the Moody's Upgrade of UI, refer to the Moody's Web site on www.moodys.com.