Fitch Affirms Cedar Brakes I Ratings; Outlook Stable

CHICAGO--()--Fitch Ratings has affirmed the 'BBB+' rating of Cedar Brakes I's (Cedar Brakes) $310.6 million ($31.3 million outstanding) senior secured bonds due 2014. The Rating Outlook is Stable.

KEY RATING DRIVERS

Counterparty linkage: The rating of the bonds is linked to the lower counterparty credit rating of Public Service Electric & Gas Company (PSE&G, rated 'A-' with a Stable Outlook by Fitch) or Exelon Corporation (EXC, rated 'BBB+' with a Stable Outlook). Due to the structural balance of the power purchase agreements (PPAs), Cedar Brakes' risk exposure is limited to PSE&G's ability to make payments under the amended and restated PPA and EXC's unconditional guarantee of Exelon Generation Company's (Exgen, rated 'BBB+' with a Stable Outlook) performance under the mirror PPA.

RATING SENSITIVITIES

Counterparty rating change: If either PSE&G or EXC are downgraded below 'BBB+', or if EXC's rating is upgraded.

SECURITY

The bonds are secured by all rights, title and interest in the assets, which include the amended and restated PPA with PSE&G, the mirror PPA with Exgen, cash accounts administered by the trustee, and various guarantees and support agreements.

CREDIT UPDATE

Cedar Brakes' rating is unaffected by the merger of Constellation Energy Commodities Group (CECG), the former counterparty under the mirror PPA with Cedar Brakes, into Exgen. The merger became effective Feb. 1, 2013. EXC continues to guarantee the mirror PPA obligations of Exgen as successor to CECG.

Cedar Brakes I purchases energy from Exgen under a long-term PPA (the mirror PPA) and resells that energy to PSE&G under a substantially similar contract (the PPA). The contractual capacity and energy payments from PSE&G comprise Cedar Brakes' only source of revenue. Debt service has been structured to match the price differential between the PPA and the mirror PPA. The project has no physical assets or employees and effectively acts as a pass-through entity.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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.

Contacts

Fitch Ratings
Primary Analyst
Christopher Joassin, +1-312-368-3166
Director
Fitch Ratings
70 West Madison Street
Chicago, Illinois 60602
or
Secondary Analyst
Dino Kritikos, +1-312-368-3150
Associate Director
or
Committee Chairperson
Gregory Remec, +1-312-606-2339
Senior Director
or
Media Relations
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst
Christopher Joassin, +1-312-368-3166
Director
Fitch Ratings
70 West Madison Street
Chicago, Illinois 60602
or
Secondary Analyst
Dino Kritikos, +1-312-368-3150
Associate Director
or
Committee Chairperson
Gregory Remec, +1-312-606-2339
Senior Director
or
Media Relations
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com