Moodys' rates TXU unit's new notes Baa2

Moody's Investor Service said it assigned a Baa2 rating to US$300 million of Rule 144A notes issued by TXU Australia Holdings Pty. Ltd.

The outlook is negative.

Moody's said the rating reflects the guarantee from TXU Australia Holdings LP, rated Baa2. The Baa2 rating recognizes the relatively stable cash flows generated from the company's regulated gas and electricity distribution networks and the diversification of business risk of its Energy Business.

The rating reflects TXU Australia Holdings LP's high level of total debt relative to total capitalization, albeit an expectation that debt levels will fall as the company pays down debt over time.

The proceeds of the bonds will be used to repay a portion of TXU Australia Holdings LP's A$1.75 billion syndicated bank facility which will mature in October 2004 and is currently drawn to about A$1.37 billion.

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