Fitch Confirms Tennessee Energy Acquisition Corp Series 2006A at 'A+' & Series 2006B at 'BBB'

NEW YORK--(BUSINESS WIRE)--

Fitch Ratings has confirmed the ratings on Tennessee Energy Acquisition Corporation's (TEAC) series 2006A bonds at 'A+' and series 2006B bonds at 'BBB'.

The series 2006A bonds are on Rating Watch Negative. The Rating Outlook for the series 2006B bonds is Stable.

The rating confirmation reflects the expected execution of a Receivable Purchase Agreement (RPA) and a modification of the indenture to incorporate the RPA. Pursuant to the RPA, the Goldman Sachs Group (GSG) will agree to purchase receivables created as a result of non-payment by a gas purchaser or the failure of DEPFA Bank plc to perform on its obligations related to the Reserve Subaccount. Fitch notes that the obligations under the RPA will only cover debt service and the termination payment on the 2006A series, which are senior to the 2006B. Thus the rating on the 2006B bonds continues to reflect the credit characteristics of the 26 underlying gas purchasers and the 25% step-up provision.

WHAT COULD TRIGGER A RATING ACTION

Change in Counterparty Ratings: The long-term rating on the bonds will continue to be determined by Fitch's assessment of the transaction structure, the role of the counterparties in the structure, and their credit quality.

For additional details regarding the transaction, please see the full report 'Tennessee Energy Acquisition Corp' (Feb. 13, 2009), which is available at 'www.fitchratings.com'.

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.

Applicable Criteria and Related Research:

--'Criteria for Rating Prepaid Energy Transactions,' dated Aug. 15, 2011;

--'Prepay Gas Transactions: Focus on Counterparty Risk,' dated Feb. 23, 2009;

--'Counterparty Criteria for Structured Finance Transactions' dated March 14, 2011;

--'Tennessee Energy Acquisition Corp 2006A and B' dated Feb. 13, 2009.

Applicable Criteria and Related Research:

Criteria for Rating Prepaid Energy Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648406

Prepay Gas Transactions: Focus on Counterparty Risk

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=427254

Counterparty Criteria for Structured Finance Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=605425

Tennessee Energy Acquisition Corporation 2006A and B

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=425798

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