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Avista Raised to Investment-Grade Credit by Moody's

Citing Wall Street's favorable reaction to its utility "back-to-basics" movement, Spokane, WA-based Avista Corp. was elevated to an investment-grade credit (Baa3), albeit the lowest rung, by Moody's Investors Service, specifically related to about $90 million of debt by the utility holding company. Concurrently, the rating agency assigned the same rating to Avista's five-year $350 million committed senior secured credit agreement with a December 2009 maturity.

The higher rating on some series C medium-term notes came from adding a first-mortgage bond security to them after they had previously been unsecured, Moody's said. Other ratings are unaffected, the rating agency said, noting that Avista's outlook remains "stable."

All of Avista's outstanding secured debt now carries an investment-grade (Baa3) rating, Moody's said.

The Baa3 senior secured rating "continues to reflect the benefits of its back-to-basics strategy, with a principal focus on core utility operations, reducing debt and restoring financial health," Moody's said. "The company continues to recover deferred energy costs under the terms of past regulatory settlements and has improved its supply position by adding (utility) owned gas-fired generating capacity to reduce its dependence on purchased power."

Moody's said the rating also considers the challenges facing Avista, such as its need to win support in future rate proceedings from state regulators in both Washington state and Idaho, while "continuing to manage risks associated with Avista Energy's trading and marketing operations." Moody's noted the energy trading had been "scaled down" to be more closely tied to Avista's own energy operations.

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