2009-11-10 20:31:02 -

Fitch Ratings assigns an 'F1+' rating to the Municipal Gas Authority of Georgia's (the authority) expected issuance of $175 million of gas revenue portfolio III notes (gas portfolio III), series G, and affirms the $461 million outstanding bonds at 'A+' and 'F1+'. The Rating Outlook is Stable.

The bonds are direct and general obligations of the authority and will refinance a

portion of its indebtedness (series C,D,E) incurred for the long-term supply projects including providing funds to the Public Gas Partners, Inc. (PGP), a joint-action consisting of six members including the authority. The notes will be split into two tranches with $90 million due in six and 12 months.

The short-term 'F1+' rating reflects the market access of the authority, available liquidity sources, and structure in which the $175 million notes will to be split into six month maturities with no more than $90 million due every six months. Liquidity sources, consisting of the authority's cash reserves of $40 million and available lines of credit (to be maintained above $65 million), are sized to be sufficient to retire one tranche of the notes maturities should market disruptions prevent debt renewal for a period of less than six months.

The long-term 'A+' rating of the authority reflects the following credit strengths and concerns.

Credit Strengths.

--The authority's diverse long-term gas supply portfolio, which includes both prepaid supplies and natural gas reserves that have historically provided discounts to members in different natural gas price environments;

--An experienced management team that has delivered consistent gas services for over 20 years to its members.

--Overall credit quality of the 76 member systems, the majority (82%) of which are located within the State of Georgia, and whose court-validated obligations are backed by the full faith and credit of their respective cities.

Credit Concerns.

--Concentration of retail member sales in industrial loads (58% of throughput) and slowing gas sales due to the economic recession;

--Increased financial pressure on member systems, resulting from higher delinquency rates by retail customers of those members, which is mitigated by the authority's strengthening of its risk management practices;

The authority is one of the largest natural gas joint action agency and manages wholesale gas supply for its 76 all-requirements members and nine partial-requirement partners. All members are local gas distribution systems owned and operated by their respective cities.

For more information see the report dated July 17, 2009.

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Fitch Ratings, New YorkDrake Richey, +1-212-908-0325Karl
Pfeil, +1-212-908-0516orCindy Stoller, +1-212-908-0526
(Media Relations) cindy.stoller@fitchratings.com : mailto:cindy.stoller@fitchratings.com