Fitch Rates AEP Texas Central's Senior Notes 'A-'

Business Wire, Feb 13, 2003

Business Editors

NEW YORK--(BUSINESS WIRE)--Feb. 13, 2003

Fitch Ratings has assigned an 'A-' rating to AEP Texas Central Company's (Texas Central), formerly Central Power and Light Co., $800 million offering of senior notes to be issued in three fixed-rate tranches of 3, 10 and 30 years, respectively and one variable-rate tranche of 3 years. The notes are unsecured obligations and rank pari passu with Texas Central's other unsecured debt. Proceeds will be used to pay down short-term debt and refinance maturing debt. The Rating Outlook remains Stable.

The ratings take into consideration Texas Central's moderate leverage and strong cash flow as well as its slow growth service territory. The risk profile of Texas Central has decreased through the sale of its retail electric provider business to Centrica and will decline further if it successfully completes its plans to sell all of its generating assets. Texas Central's credit profile is further enhanced by it affiliation with its parent, American Electric Power Co, Inc. (AEP) which enables the company to participate currently in the AEP power pool and to benefit from its financial expertise.

Texas Central's leverage in terms of debt to total capitalization is moderately high for the ratings category at 58.7% as of Sept. 30, 2002, however Fitch deems Debt to EBITDA to be a more accurate measure of leverage and at 2.99 times (x) is commensurate with the ratings category. Also interest protection is strong with the ratio of EBITDA to interest at 4.84x for the twelve months ending Sept. 30, 2002.

Texas Central is a wholly owned subsidiary of the American Electric Power Co., Inc. and is engaged in the generation, transmission and distribution of electric power to 680,000 retail customers in south central Texas.