TEXT-S&P comments on Exelon/Constellation Energy Group
March 12 - Standard & Poor's Ratings Services said today that the March 9, 2012, Federal Energy Regulatory Commission's (FERC) approval of the merger of Exelon Corp. (BBB/Stable/A-2) and Constellation Energy Group Inc. (BBB-/Watch Pos/A-3) would not immediately affect ratings. We expected the FERC approval following approvals from the Maryland Public Service Commission and the PJM Interconnection market monitor, but also note the record-setting fine the FERC levied on Constellation for alleged market manipulation charges dating back to trading activity in 2007 and 2008. Constellation has denied any wrongdoing, but agreed to the settlement that resolves the charges. Over the next several weeks we will assess the combined company's financial risk profile. While power markets have declined meaningfully--and negatively affect the credit quality of the unregulated generation business--we expect the pro forma financials to support a 'BBB' rating.
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