Fitch rates FirstEnergy BBB

Fitch Ratings said it assigned FirstEnergy Solutions Corp. an issuer default rating of BBB, senior secured rating of BBB+, senior unsecured rating of BBB and short-term rating of F2.

The outlook is stable.

Proceeds will be used to repay borrowing under the parent FirstEnergy Corp. (BBB/stable) credit agreement and for other general corporate purposes.

Ratings reflect the company's large portfolio of low-cost generation assets and short-term hedge position that should result in solid cash flows over the next two years, the agency said.

The company's credit protection measures in 2009 are expected to be consistent with the BBB category with debt-to-EBITDA ratio at less than 4x, the agency noted.

Concerns include higher business risk as the company becomes more dependent on market-based generation rates, the relatively short-term nature of the rolling hedging strategy, exposure to costs relating to changes in environmental legislation and the impact of the economic recession on regional power prices and demand, Fitch said.

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