S&P: KeySpan unaffected

Standard & Poor's said Monday that its ratings on KeySpan Corp. (A/negative/A-1) and its subsidiaries will not be affected by the company's announcement that it is selling an additional 35% of KeySpan Energy Canada Partnership.

This action follows KeySpan's June 2003 sale of 39% of KeySpan Canada, and acts as the second step in the company's sale of this noncore business.

S&P said it recognizes this event as the latest in a series of noncore sales favorable for KeySpan's credit quality. Such actions have allowed the company to strengthen its balance sheet throughout the past 18 months.

However, the ratings outlook remains negative, because cash flow continues to be weak relative to KeySpan's debt levels and business risk despite recent improvements. Importantly, the company's noncore asset sales program - and corresponding debt-reduction plan - is progressing more slowly than S&P had expected.

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