TEXT-Fitch on Teco Energy and Tampa Electric

(The following statement was released by the rating agency)

March 26 - Fitch upgrades the Issuer Default Rating (IDR) and senior
unsecured debt ratings of TECO Energy, Inc. (TE.N: Quote, Profile, Research) (TECO) to 'BBB-' from 'BB+'.
In addition, Fitch has removed TECO and its subsidiary, Tampa Electric Company
(Tampa Electric) from Rating Watch Positive. The Rating Outlook is Stable.
Fitch affirms the IDR of Tampa Electric at 'BBB'. Approximately $3.2 billion of
debt is affected by today's rating actions.
Fitch's upgrade of TECO reflects the leverage reduction resulting from pay-down
of parent debt using a portion of the proceeds from the $405 million sale of
the barge operations and earlier debt reduction efforts. TECO reduced parent
and parent guaranteed debt by $765 million in 2007. Fitch expects TECO's FFO
coverage ratio to be approximately 3.8 times (x) and a FFO to debt ratio of
approximately 19% in 2008, which are consistent with guidelines for the new
rating level. In addition, TECO has reduced business risk over the past few
years through sales of certain non-regulated operations and a focus on Florida
utility operations.
TECO's liquidity position is considered strong. Cash and cash equivalents were
$162.6 million and available credit facilities were $640.5 million at year-end
2007. Liquidity is enhanced by $508 million of net operating losses tax
carry-forwards as of Dec. 31, 2007, which is expected to result in minimal cash
tax payments through 2010. In addition, there was approximately $197 million of
alternate minimum tax carry forwards at Dec. 31, 2007. There is no long-term
debt maturing at the parent holding company in 2008 or 2009 and TECO has
extended the average life of its debt through refinancing efforts.
TECO's ratings are supported by upstream dividends from regulated utilities in
Florida and profitable coal mining and Guatemala power investments. Primary
credit concerns are increasing operating costs at the utilities, a weak Florida
housing market and slowing state economy that are expected to contribute to
more moderate growth of energy sales, and increasing capital spending for new
gas-fired generation capacity and other investments. In addition, Fitch is
concerned that higher risk TECO Coal and Guatemala operations may begin to
contribute a greater proportion of consolidated cash flow.
The ratings of Tampa Electric were affirmed. Credit metrics are expected to
remain consistent with the current rating for the next few years assuming the
State regulatory environment continues to be supportive and the parent company
invests equity in the utility. In 2008, Tampa Electric is expected to file for
its first base rate increase since 1992 as it continues to invest to meet
system growth and reliability needs. Credit concerns include an increasing
reliance on gas-fired generating capacity over the next five years, more
stringent environmental regulations, slower kilowatt hour sales growth and the
need for base rate relief to earn allowed rates of return.
Fitch has upgraded the following ratings and assigned a Stable Rating Outlook:
TECO Energy, Inc.
--IDR to 'BBB-' from 'BB+';
--Senior unsecured to 'BBB-' from 'BB+'.
TECO Finance
--IDR to 'BBB-' from 'BB+';
--Senior unsecured to 'BBB-'from 'BB+'.
Fitch has affirmed the following ratings and assigned a Stable Rating Outlook.
Tampa Electric Company
--IDR at 'BBB';
--Senior unsecured at 'BBB+';
--Short-term rating at 'F2'
--Commercial paper at 'F2'.
(New York Ratings Team)