Moody's raises Edison Mission Energy, rates notes B1

Moody's Investors Service said it upgraded the corporate family rating of Edison Mission Energy (EME) to Ba3 from B1, affirmed EME's existing senior unsecured notes at B1, assigned a B1 rating to a proposed new issuance of senior unsecured notes and assigned EME a speculative grade liquidity rating of SGL-2.

Moody's also said it affirmed the rating of EME's parent, Mission Energy Holdings Co. (MEHC: B2 senior secured), upgraded the second-lien notes of subsidiary Midwest Generation, LLC (MG) to Ba3 from B1 and assigned a Ba2 rating to MG's $830 million first-lien amended bank credit facilities.

The outlook is stable.

The upgrade of EME's corporate family rating to Ba3 reflects strong financial performance and cash-flow generation for 2005 and first-quarter 2006 and an expectation for improved operating margins and cash-flow generation for the next few years, due to forward hedges at subsidiaries, MG and Homer City Generating Station that underpin operating margins for 2006 and 2007, the agency noted.

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