Fitch Ratings has upgraded the ratings of Georgia-Pacific LLC (GP) asfollows:

--Issuer Default Rating (IDR) to 'BBB-' from 'BB+';
--Seniorsecured revolver to 'BBB' from 'BBB-';
--First lien term loans to 'BBB' from 'BBB-';
--Guaranteed senior unsecured notes to 'BBB-'from 'BB+'; and
--Senior unsecured bonds/notes to 'BB+' from 'BB'.

The ratings upgrade is based on GP's history of and dedication to debt reduction and the likelihood of further debt reduction. The RatingOutlook is Stable.

GP finished 2010 by repaying some $785 million in debt, marking five years of consecutive debt reduction since its acquisition by KochIndustries. EBITDA topped $3.4 billion on a 7.1% increase in sales, and leverage metrics declined to 2.7 times (x) net debt/EBITDA. The starperformer in 2010 was GP's Packaging business whose EBITDA rose 70% fromthe prior year. Packaging benefited from a 13% increase in containerboard volumes, product from the Alabama River mills acquired in 2010, a $110/ton industry-wide increase in linerboard list prices and a similar $100/tonne increase in pulp list prices.

For 2011 Fitch expects that a 5% increase in EBITDA, again attributable mostly to GP's packaging business, notably pulp exports, plus cash on the balance sheet will finance a $1.0 billion repayment of debt. Earnings from GP's consumer products business (tissue) are expected to decline slightly owing to cost inflation in energy and chemicals. No significant improvement is expected in the earnings from building products because of the malaise in home construction. Leverage metrics are expected to improve to 2.3x net debt/EBITDA with interest coverage increasing to 5.8x by the close of 2011.

Upside to Fitch expectations could come from price initiatives in tissue products after subtracting promotional activities. Both Proctor & Gamble and Kimberly-Clark have reportedly announced price increases of 5% and7%, respectively, on toilet paper and paper towels. In addition Cascades and Krueger are reported to have raised prices by 7.5% while the five largest 'away from home' tissue producers have announced price increasesof 6%-9%. All pave the way to a larger revenue line in 2011 -- that increase flowing through to EBITDA and cash flow.

GP will likely address the upcoming maturities of its two term loans and its revolver in the near future. GP generates around $1.0 billion in free cash flow per year, but secured term loans of $2.3 billion and $1.0 billion (less a small amount of amortization) mature in December of 2012 and 2014, respectively. GP also has a little over $800 million in bonds maturing this year, and its secured revolver of $1.25 billion which is undrawn comes due in October 2012. Absent additional sources of capital, it is likely that GP will look to the bond and/or bank markets foradditional finance within the next twelve months. Both have beenreceptive in the past. In the interim liquidity is ample with roughly $2.8 billion in funds available at the close of this past first quarter, $1.1 billion of that in cash. Total debt at the end of the first quarter stood at $9.8 billion.

GP must also pay for ongoing asbestos settlements and environmentalremediation costs. Fitch estimates that these amount to less than $200 million per year and have already been included in arriving at free cashflow. GP reports that it is in compliance with the financial tests within its revolver, which include a maximum leverage ratio and a minimum interest coverage ratio.

Further ratings upgrades will depend on added debt reduction. This ability is currently hindered by the performance of GP's BuildingProducts sector which in time will turn into a more significant sourceof cash flow.