Fitch Upgrades DPL Inc. & Dayton Power & Light Company

Business Wire, March 29, 2007

NEW YORK -- Fitch Ratings has upgraded DPL Inc. (DPL) and Dayton Power & Light Co. (DP&L) as follows:

DPL

--Issuer Default Rating (IDR) to 'BBB ' from 'BBB';

--Senior unsecured to 'BBB ' from 'BBB'.

DP&L

--Issuer Default Rating (IDR) to 'A-' from 'BBB ';

--First mortgage bonds to 'A ' from 'A';

--Secured PCRBs to 'A ' from 'A';

--Preferred stock to 'A-' from 'BBB '.

The short-term IDR of DPL and DP&L are affirmed at 'F2' and 'F1' respectively. The Rating Outlook is Stable. Approximately $1.5 billion of debt is affected by the rating action.

The higher ratings reflect an overall reduction in risk profile and improvement in DPL's financial metrics. The ratings consider debt reduction at the parent company, strong utility cash flows, declining capital expenditures, a conservative utility capital structure, and adequate liquidity at both the parent company and utility level under Fitch's moderate stress scenarios. The low risk business profile is supported by the conservative strategy focused on improving utility operations, a constructive regulatory environment, a physical hedge against commodity prices, and minimal threat of retail competition. Still with approximately $767 million in parent level debt, DPL remains moderately leveraged a legacy of a prior diversification strategy.

The Stable Rating Outlook reflects Fitch's expectation that the utility will continue to generate $350 million-$400 million of sustainable cash flow each year. Fitch projects that 2007 consolidated credit metrics will remain strong, with funds-from-operations (FFO) to interest coverage of 4.0 times (x) to 5.0x and total debt-to-FFO of 4.0x to 5.0x.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. 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.