Fitch revises CenterPoint outlook to negative

Fitch Ratings said it has affirmed the outstanding credit ratings of CenterPoint Energy Inc. and its subsidiaries CenterPoint Energy Houston Electric LLC and CenterPoint Energy Resources Corp. and revised the outlook for all three companies to negative from stable.

Ratings affected include CenterPoint Energy Inc.'s BBB- rated senior unsecured debt and convertible senior notes as well as the company's BB+ rated trust originated preferred securities and zero premium exchange notes. Also affected are CenterPoint Energy Resources Corp.'s BBB- rated convertible preferred securities and BBB senior unsecured notes and debentures.

Fitch said the revised outlook reflects a higher degree of uncertainty over CenterPoint Energy Inc.'s ability to monetize its 81% interest in Texas Genco Holdings, one of two primary de-leveraging events factored into Fitch's current ratings.

The current rating assumes that de-leveraging will be accomplished from proceeds of stranded cost recovery bonds and from the sale of Texas Genco Holdings.

However, the significant appreciation in Texas Genco's stock price since January 2003 (current market capitalization approximates $2.4 billion) may reduce CenterPoint Energy Inc.'s proceeds from stranded cost recovery, even though Centerpoint Energy Inc. may not be able to realize a market value for its residual 81% ownership of Texas Genco equivalent to the value of the trading minority interest.

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