Fitch Rates New York State Energy Research & Devel Authority $99MM 2004C Revs 'AAA/F1+'

Business Wire, Oct 28, 2004

NEW YORK -- Fitch Ratings assigns a rating of 'AAA/F1 ' to the $99,000,000 New York State Energy Research and Development Authority Facilities revenue bonds, series 2004C (Consolidated Edison Company of New York, Inc.) The long-term 'AAA' rating is based jointly on Consolidated Edison Company of New York, Inc. (Con Ed) (currently rated 'A ' by Fitch) and the support provided by an irrevocable letter of credit (LOC) issued by Citibank N.A. (the Bank) (currently rated 'AA /F1 ' by Fitch) securing the bonds. The short-term rating 'F1 ' is based solely on the LOC. The long-term 'AAA' rating is based on Fitch's methodology which considers the joint probability of the failure of both a rated obligor and a bank LOC provider. The methodology results in a rating that is two notches higher than the stronger of the two credits if the following conditions are met: (1) both entities have a rating of 'A' or higher; (2) the transaction is structured such that payments from both the municipal issuer and the bank are in the flow of funds and both entities would have to fail to perform before the bonds defaulted; and (3) the credit of the bank and the rated obligor have a low degree of correlation. Both entities must be rated 'A' or higher for this methodology to be applied. If either Con Ed or the Bank were downgraded to 'A-' or lower, the long-term rating assigned to the bonds would drop to that of the higher rated entity.

The bonds will be issued as three subseries: $33,000,000 subseries 2004C-1; $33,000,000 subseries 2004 C-2; and $33,000,000 subseries 2004 C-3. The bank is obligated to make payments of principal of and interest upon maturity, acceleration and redemption, as well as the purchase price for tendered bonds. The rating will expire upon the earliest of: Nov. 4, 2009, the stated expiration date of the LOC, unless such date is extended; any prior termination of the LOC; and defeasance of the bonds. The LOC provides full coverage of principal plus an amount equal to 45 days' interest at a maximum rate of 10% based on a 365-day year and purchase price for tendered bonds. The Bank of New York is the Trustee, Registrar and Paying Agent for the bond issue. The Underwriter and Remarketing Agent for the subseries 2004C-1 bonds is Citigroup Global Markets Inc. Morgan Stanley & Co. Incorporated will serve as Underwriter and Remarketing Agent for the subseries 2004C-2 bonds and J.P. Morgan Securities, Inc. will serve as Underwriter and Remarketing Agent for the subseries 2004C-3 bonds. The bonds are expected to be delivered on or about Nov. 3, 2004.

The bonds initially will bear interest at the weekly interest rate, but may be converted to a daily, monthly, commercial paper, auction, semi-annual, term or fixed interest rate. While bonds bear interest in the weekly mode, interest payments will be made on the first business day of each month, commencing Dec. 1, 2004. While bonds are in the weekly mode, bondholders may tender their bonds on any business day with seven days prior notice of the purchase. The bonds are subject to mandatory tender upon interest mode conversion dates and upon substitution, expiration or termination of the LOC. Optional and mandatory redemption provisions also apply to the bonds.

Bond proceeds will be used to pay for the redemption price of prior bonds.