Fitch Ratings upgrades the following credit ratings for the debt obligations of CMS Energy Co. (CMS) and Consumers Energy Co. (Consumers).

CMS

-- Senior secured bank loan to 'BB' from 'BB-';

-- Preferred securities and trust preferred securities to 'B' from 'B-';

Consumers

-- Senior secured debt to 'BBB-' from 'BB+';

-- Preferred securities and trust preferred securities to 'BB-' from 'B'.

The 'B+' senior unsecured rating for CMS and the 'BB' senior unsecured rating for Consumers have been affirmed. The Rating Outlook for CMS has been revised to Positive from Stable. The Rating Outlook for Consumers remains Stable. Approximately $6.7 billion of debt is affected.

The rating changes follow a recent review of the credits and reflects Fitch's latest assessment of the company's financial position and business strategy. Over the past 18 months, management has taken various actions, including the successful refinancing of secured bank facilities and the completion of the majority of targeted asset sales, which have benefited CMS' credit profile and have resulted in a stabilization of CMS' credit quality. Consequently, the company now has reduced business risk, improved access to capital markets, and lower levels of consolidated debt. The ratings also recognize CMS' ownership of a regulated utility, Consumers, and the stable dividends and enterprise value relating to that investment. CMS is strongly dependent on cash flow from Consumers to service parent debt obligations. Qualitative factors that positively affect the ratings of CMS and Consumers also include recent favorable regulatory developments in Michigan.

The Positive Outlook for CMS takes into consideration the improvement in CMS' financial profile due to lower parent debt levels and an improved liquidity position, with no material debt maturities through 2006. Events that could result in further positive rating action include the ability to demonstrate continued improvement in the ratio of consolidated debt to cash flow from operations and further parent debt reduction. Events that could adversely affect ratings include credit deterioration at Consumers or the inability to refinance maturing CMS parent debt. Fitch notes that CMS will be dependent on additional asset sales or accessing capital markets to refinance a part of the debt maturing 2007 and 2008, when $468 million and $410 million of parent debt becomes due.

The upgrade of Consumers' senior secured debt reflects the utility's strong business characteristics, stable and predictable cash flows, as well as sound electric and gas distribution franchises. Recently, the utility received final orders from the Michigan Public Service Commission (MPSC) on several regulatory filings, including a gas rate case, a stranded cost case, a securitization case and a gas depreciation case. Overall, Fitch views the rate proceedings as having a slightly positive impact on the ratings of Consumers. In particular, the ability to recover approximately $628 million of costs primarily associated with environmental compliance over the next five years will be beneficial to the utility's cash flow. Fitch expects Consumers to file for an electric rate case by year-end 2004, with an anticipated implementation date of Jan. 1, 2006. Recent actions by the MPSC should result in reduced financial exposure to commodity risk and loss of margin due to electric competition, will have favorable implications for Consumers.

CMS is a utility holding company whose primary subsidiary is Consumers, a regulated electric and gas utility serving more than 3.4 million customers in western Michigan. CMS also has operations in natural gas pipelines and independent power production.