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DUFF & PHELPS DOWNGRADES SOUTHWEST GAS CORPORATION AND RATES NEW ISSUE

 CHICAGO, Nov. 30 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has lowered the ratings of Southwest Gas Corporation's outstanding debentures and Clark County, Nev. Industrial Development Revenue Bonds to `BB+' (Double-B-Plus) from `BBB-' (Triple-B-Minus). The action affects over $400 million of securities.
 In addition, a rating of `BB+' (Double-B-Plus) has been assigned to the proposed offering of $75 million of Clark County, Nev. Industrial Development Revenue Bonds, 1993 Series A (Southwest Gas Corporation) due 2033. Proceeds will be loaned to Southwest Gas Corporation under a financing agreement and used to fund the costs of construction of improvements to certain facilities for the local furnishing of gas in Clark County, Nev.
 Southwest Gas' financial protection measures remain weak, reflecting in part its highly leveraged capital structure. The utility segment has experienced a decline in earnings with only limited improvement foreseen over the forecast period. Performance for 1993 will be negatively impacted by a disappointing rate order in the Nevada jurisdictions, warm weather in the early part of the year, and rising expenses attributable largely to strong customer growth. The leveraged capital structure is apt to persist longer than had been expected as management options for correction appear to be narrowed by a slower rate of growth in earnings.
 While Southwest Gas continues to experience above average customer growth, it has had difficulty achieving sustainable margins and allowed returns on equity in its major regulatory jurisdictions. Regulatory lag and cost disallowances have adversely affected financial performance. Prospectively, the need for timely and supportive rate relief is critical given rising costs to service new customers and continued rate base growth. Appeals remain pending on costs associated with the company's Arizona pipe replacement program which have been excluded from rate base; the company continues to carry approximately $15 million of such costs on its balance sheet.
 The rating also incorporates the business and financial risks associated with the company's wholly owned subsidiary, PriMerit Bank. The bank has improved its financial position by reducing its level of problem assets and increasing capital. The Office of Thrift Supervision recently removed all elements of the bank's supervisory agreement. Longer term, the bank's critical challenge will be its ability to achieve consistent profitability while competing with large, well- established financial institutions.
 Southwest Gas Corporation is a diversified natural gas utility and financial services organization. Core utility operations distribute and transport natural gas to primarily residential and small commercial markets in portions of Arizona, Nevada, and California. The utility segment appears prepared for the changing gas marketplace under FERC Order 636, having purchased natural gas from a diverse group of non- pipeline suppliers for several years and undergone periodic regulatory review of its gas purchase contracts.
 -0- 11/30/93
 /CONTACT: Lynda A. Housa of Duff & Phelps, 312-368-3156/
 (SWX) CO: Southwest Gas Corporation ST: Nevada IN: UTI SU: RTG


GK-PS -- NY047 -- 8693 11/30/93 11:32 EST
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Publication:PR Newswire
Date:Nov 30, 1993
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