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LILCO SENIOR DEBT RAISED TO 'BBB,' PREFERRED TO 'BBB-' BY FITCH -- FITCH FINANCIAL WIRE --

 LILCO SENIOR DEBT RAISED TO 'BBB,' PREFERRED TO 'BBB-' BY FITCH
 -- FITCH FINANCIAL WIRE --
 NEW YORK, April 23 /PRNewswire/ -- Long Island Lighting Co.'s (LILCO) $360 million first mortgage bonds and $1.8 billion general & refunding bonds are upgraded to "BBB" frB." A new $215 million shelf registration of general and refunding bonds is rated "BBB" and a $490 million preferred stock shelf is rated "BBB-." The credit trend is improving.
 Although some of LILCO's traditional financial protection measures are relatively weak for the rating category, several factors mitigate the importance of these measures. Most important are the assurance of electric rate increases through December 1993 which include unique revenue and fuel ratemaking mechanisms, the continued aggressive refinancing of high cost debt and preferred stock, low acid rain exposure, and the recent transfer of ownership of the Shoreham nuclear plant to the Long Island Power Authority.
 In November 1991, continuing the rate settlement plan implemented in 1989, the Public Service Commission approved a second three-year electric rate plan that provides for rate increases of 4.15 percent, 4.1 percent and 4.0 percent effective Dec. 1, 1991, 1992 and 1993, based on an 11.6 percent return on common equity.
 The plan includes mechanisms for revenue and expense attrition reconciliation and performance incentives that should provide the company with a reasonable opportunity to earn and exceed the authorized equity return. Under the incentive program, the company can earn up to 60 basis points ($11 million after-tax) above or be penalized 38 basis points ($7 million after tax) below the allowed equity return. A separate plan permits the equal sharing between ratepayers and shareholders of earnings in excess of the allowed equity return.
 During 1991, the company refinanced about $1.2 billion of high cost debt and preferred stock and utilized $100 million of tax exempt securities. Between 1992 and 1995, the company estimates that $1.8 billion of external financing will be needed principally to refund maturing debt and meet its operating and capital requirements. The company will continue to utilize tax exempt securities and refund high cost debt and preferred stock when market conditions are favorable. Over the next several years, capitalization ratios (63.9 percent long-term debt, 8.8 percent preferred stock and 27.3 percent common equity at year-end 1991) and pre-tax interest coverage (1.98 times) are expected to remain relatively unchanged although a significant improvement in earnings quality, cash flow and internal cash generation is anticipated over the period. The recent completion of the Iroquois gas pipeline will increase the reliability of the company's gas supply, providing an opportunity for more rapid growth in the number of new gas space heating customers.
 -0- 4/23/92
 /CONTACT: Stephen Fedun of Fitch, 212-908-0568/
 (LIL) CO: Long Island Lighting Co. ST: New York IN: UTI SU: RTG


SH -- NY123 -- 2087 04/23/92 16:10 EDT
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Publication:PR Newswire
Date:Apr 23, 1992
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