S&P affirms Avista

Standard & Poor's said it affirmed the corporate credit rating on Avista Corp. (BB+/positive/B-1).

The rating action follows the completion of the sale of Avista Energy's assets to Coral Energy Holding LP (A-/stable) on June 30, the agency said, noting that the sale of Avista Energy removes a significant degree of cash flow volatility and risk from consolidated operations and squarely focuses the company on the regulated gas and electric operations of Avista Utilities.

Going forward, the majority of consolidated cash flows will come from Avista Utilities, which is an operating division of Avista Corp., the agency said.

While the stronger business profile bodes well for an improvement in Avista's corporate credit rating, 2006 financial ratios fall short of the agency's benchmarks for the BBB category and 2007 results are likely to be adversely affected by continued mediocre hydro conditions in the Pacific Northwest.

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