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Announcement:

Moody's affirms FPL Energy American Wind and Wind Funding ratings; outlook stable

23 Aug 2010

Approximately $255.1 million in debt affected

New York, August 23, 2010 -- Moody's has affirmed the Baa3 rating on FPL Energy American Wind's (American Wind, OpCo) senior secured bonds ( $200.6 million outstanding) and the Ba2 rating on FPL Energy American Wind Funding's (Wind Funding, HoldCo) senior secured bonds ($54.5 million outstanding). The outlook for American Wind and Wind Funding is stable. The affirmation and maintenance of a stable rating outlook reflects above average liquidity and demonstrated financial resilience in very low wind years, however escalating operations and maintenance costs remain a concern.

American Wind generates revenue principally from PPA revenues largely with investment grade offtakers and federal production tax credits while Wind Funding's sole source of cash flow are distributions from American Wind. For the most recent three year period, American Wind averaged approximately 1.5x, a solid Baa-metric with consolidated coverage around 1.12x. Most recent management coverage calculations through May 2010 however indicates a potential for cash trapping at the OpCo with 1.31x reported coverage. Cash can be trapped if OpCo DSCR is 1.3x on a historical or prospective basis and Moody's full-year calculation shows high likelihood of a cash trap trigger by year end. While Moody's views current coverage as extremely narrow and projected cash trap trigger as credit negative, we expect coverage to improve in 2011 as OpCo amortization declines by $4.7 million. The amortization continues declining through 2014 when PTCs fully expire, allowing the project to maintain sufficient investment grade metrics in at least the 1.3-1.5x range, based upon somewhat conservative wind volume and operating expense assumptions, and adequate consolidated coverage.

An important consideration for the affirmation and stable rating outlook is the above average level of liquidity at both OpCo and HoldCo. Both legal entities benefit from individual twelve-month, debt service reserve letters of credit. Had a more typical six-month debt service reserve been in place, rating pressure would exist at both the Opco and Holdco level given the drop-off in wind volumes recently experienced. The rating could merit downward pressure should wind production remained at depressed levels in the near term.

The affirmation recognizes narrow metrics but also the resilience of the portfolio given the extremely low wind year and increased costs. Assuming average production over the most recent five year periods and applying current PPA pricing, revenues are expected to remain sound through the near and medium term. In light of the strong performance given extremely low wind conditions, Moody's remains concerned about the escalating O&M costs and FPL's ability to reduce them or, at a minimum, contain them at current levels. The combination of higher than expected O&M and lower wind production that is well off from initial base case forecasts has ultimately led to reduced PPA and PTC revenues and are credit concerns.

FPL Energy American Wind, LLC is a Delaware limited liability company formed on April 2003 solely for the purpose of financing a 697MW portfolio of seven wind power generating projects, located in California, the Midwest, New Mexico and Texas. Virtually all of the power generated by the projects is sold pursuant to long-term fixed-price Power Purchase Agreements (PPAs) with, or guaranteed by, utilities, municipalities or cooperatives. Each project is owned by a separate entity (Project Owner). Each of the Project Owners guarantees the repayment of the bonds on a joint and several basis.

FPL Energy Wind Funding, LLC is an intermediate holding company that owns FPL Energy American Wind. Both FPL Energy American Wind and FPL Energy Wind Funding are indirect wholly-owned subsidiaries of NextEra Energy Resources LLC, (NextEra) the largest owner of wind projects in the U.S. NextEra is wholly-owned by FPL Group Capital Inc. (Baa1, senior unsecured) and FPL Group Capital is wholly-owned by NextEra Energy, Inc. (Baa1 Issuer Rating).

The last rating action was on June 23, 2003 when Moody's initially assigned ratings to FPL Energy American Wind and on December 8, 2003 when Moody's initially assigned ratings to FPL Energy Wind Funding.

The principal methodology used in rating FPL Energy American Wind and FPL Energy Wind Funding was Power Generation Projects, which can be found at www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.

New York
Charles Berckmann
Analyst
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Chee Mee Hu
MD - Project Finance
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

Moody's affirms FPL Energy American Wind and Wind Funding ratings; outlook stable
No Related Data.
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