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PUBLIC SERVICE COMPANY OF NEW MEXICO PREFERRED STOCK DOWNGRADED TO 'CCC' ADDED TO RATING WATCH -- FAVORABLE/UNFAVORABLE

 CHICAGO, Jan. 28 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has lowered the rating of Public Service Company of New Mexico's preferred stock to CCC' (Triple-C) from BB' (Double-B), and placed the preferred stock on Rating Watch -- Favorable/Unfavorable.
 Public Service Company of New Mexico has announced write-offs effective December 1992 which will more than eradicate retained earnings. The write-offs reflect obligations under a contract to purchase capacity at a price higher than market, and for carrying costs of Palo Verde 3 not in rate base. Formerly, these costs had been expensed monthly.
 There will no effect on cash, and future earnings should be higher, other factors being equal. However, dividends can only be paid from retained earnings. An interruption in the preferred dividend would be due to technical reasons. The Rating Watch -- Favorable/Unfavorable recognizes efforts the company will be making for a quasi capital restructuring. Several other companies have declared several quarter's dividends in advance until ongoing earnings can restore retained earnings and cover the dividend.
 The company's debt ratio (now 65 percent) will be close to triggering the 70 percent maximum under the letter of credit agreement. There may be need for a waiver if this violation occurs.
 -0- 1/28/93
 /CONTACT: William A. Abrams of Duff & Phelps, 312-368-3112/
 (PNM)


CO: Public Service Company of New Mexico ST: New Mexico IN: UTI SU: RTG

SM -- NY092 -- 0448 01/28/93 16:28 EST
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Publication:PR Newswire
Date:Jan 28, 1993
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