Fitch Rates Tortoise Energy Capital Corp.'s Preferred Stock 'AA'

NEW YORK--([ BUSINESS WIRE ])--Fitch Ratings has assigned the following ratings to mandatory redeemable preferred stock (MRPS) issued by Tortoise Energy Capital Corp. (NYSE: TYY), a closed-end fund managed by Tortoise Capital Advisors, LLC (Tortoise):

--$50,000,000 5% mandatory redeemable preferred shares series B, 5,000,000 shares with a liquidation preference of $10 per share, due on March 1, 2018 'AA'

The main drivers for the assigned rating are the asset coverage provided to MRPS by the fund's assets, structural protections afforded by mandatory de-leveraging provisions in the event of asset coverage declines, the legal and regulatory parameters that govern the fund's operations and the capabilities of Tortoise as investment advisor.

TYY expects to use the proceeds from this issuance to redeem in full outstanding $45,000,000 series A MRPS issued in December 2009 and for other general corporate purposes. Series A MRPS are currently rated 'AA' by Fitch. The rating will be considered 'Paid In Full' upon full redemption of Series A MRPS.

At the time of the MRPS issuance, TYY's asset coverage ratio was in excess of 200%, which is the minimum asset coverage level required by the Investment Company Act of 1940 with respect to preferred stock. TYY's pro forma asset coverage ratio, calculated in accordance with the Fitch overcollateralization test per the 'AA' rating guidelines outlined in Fitch's applicable criteria, was in excess of 100%. This is the minimum asset coverage deemed consistent with an 'AA' rating. Should either of the asset coverage tests decline below their minimum threshold amounts and are not cured in a pre-specified timeframe, the governing documents require the funds to reduce the leverage in a sufficient amount to restore compliance with the applicable asset coverage tests.

The MRPS are expected to trade on the New York Stock Exchange (NYSE) under the ticker 'TYY Pr B' within 30 days. Prior to the commencement of trading on the NYSE, it is anticipated that the MRPS will remain illiquid. Regardless, Fitch's rating on the MRPS speaks to credit risk of the security and not to potential liquidity in the secondary market.

Tortoise Energy Capital Corporation is a non-diversified, closed-end management investment company that commenced operations on May 31, 2005. As of Jan. 31, 2011, the fund's total assets were $800.5 million. Under normal market conditions, the fund invests at least 80% of its managed assets in equity securities of energy companies and it invests at least 80% of its managed assets in equity securities of master limited partnerships (MLP), including their affiliates in the energy infrastructure sector. TYY may invest up to 50% of its managed assets in restricted securities, all of which may be illiquid and may invest up to 20% of its managed assets in debt securities, including securities rated below investment grade.

Tortoise, a wholly owned subsidiary of Tortoise Holdings, LLC, is TYY's investment adviser, responsible for the fund's overall investment strategy and its implementation. The advisor was formed in October 2002 and, as of Dec. 31, 2010, had approximately $6.1 billion in assets under management in six NYSE-listed investment companies and private accounts. Mariner Holdings, LLC owns approximately 65% of Tortoise Holdings, LLC, with the remaining interest held by Tortoise's five managing directors and certain other senior Tortoise employees.

The rating may be sensitive to material changes in the credit quality or market risk profiles of the funds. A material adverse deviation from Fitch guidelines for any key rating driver could cause Fitch to downgrade the rating.

Additional information is available at '[ www.fitchratings.com ]'

The sources of information used to assess these ratings were the public domain, and Tortoise Capital Advisors.

Applicable Criteria and Related Research:

--'Closed-End Fund Debt and Preferred Stock Rating Criteria (Aug. 17, 2009);

--'U.S. Leveraged Closed-End Funds: Taking Remedial Actions to Offset Market Stresses (Feb. 11, 2009);

--'FAQs on ARS Issued by Closed-End Funds (June 4, 2008);

--'Closed-End Funds' Leverage Refinancing & Fitch ARS Ratings (May 7, 2008).

Applicable Criteria and Related Research:

Closed-End Fund Debt and Preferred Stock Rating Criteria

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=462492 ]

U.S. Leveraged Closed-End Funds: Taking Remedial Actions to Offset Market Stresses

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=425086 ]

Closed-End Funds' Leverage Refinancing & Fitch ARS Ratings

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=385496 ]

FAQs on ARS Issued by Closed-End Funds

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=388632 ]

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: [ HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS ]. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '[ WWW.FITCHRATINGS.COM ]'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

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Fitch Rates Tortoise Energy Capital Corp.'s Preferred Stock 'AA'