Fitch: Perspective on the U.S. DOE Loan Guarantee Program

Business Wire, March 11, 2008

NEW YORK -- Fitch Ratings has published a special report outlining its analytical approach to ratings for the U.S. Department of Energy's (DOE) loan guarantee program.

The DOE loan guarantee program is a legislative initiative under the Energy Policy Act of 2005 to facilitate financing and stimulate commercial development of innovative energy projects, specifically renewable energy and 'environmentally friendly' technologies. The program requires all applicants to obtain a credit assessment for loans in excess of $25 million and a final rating as a condition of closing. The assessment is based on the underlying economics of the borrower and/or the project without considering the guarantee. That is, it will represent the estimated risk of providing the guarantee rather than the rating of the guaranteed loan.

Fitch's Global Power and Project Finance teams have and continue to receive numerous inquiries from project sponsors, state regulators and financial market participants regarding our approach to ratings for DOE loan guarantee applications. Fitch has also received inquiries on how borrowings under the DOE program to fund projects might affect existing corporate credit ratings of corporate or utility sponsors and Fitch's approach to analyzing the risks of advanced energy projects, including new nuclear plants.

Fitch's established corporate rating methodology, which captures probability of default and loss given default across the credit spectrum will be the basis for rating assignments under the program.

The corporate and project ratings processes include qualitative and quantitative considerations to assess operating and financial risks. Sensitivity analyses are performed through several 'what if' scenarios to assess borrower capacity to cope with changes in its construction plan, operating performance, market environment, financing terms, unforeseen contingencies and other potential stresses.

The full report is titled 'Fitch's Perspective on the U.S. Department of Energy's Loan Guarantee Program' is available on the Fitch Ratings' web site www.fitchratings.com.

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.