S&P rates KeySpan notes A

Standard & Poor's said it assigned its A senior unsecured debt rating to KeySpan Corp.'s proposed $300 million senior notes due 2035. The outlook is stable.

The notes are an exchange of a portion of KeySpan's previously remarketed $394 million senior notes associated with the company's $460 million in equity unit securities maturing in 2008. KeySpan will not receive any proceeds from the transaction, but rather the company will benefit from the extended maturities of the new notes.

S&P said the ratings on KeySpan reflect the consolidated credit profiles of the company's regulated gas distribution operations, including KeySpan Energy Delivery New York, KeySpan Energy Delivery Long Island, Boston Gas Co., Colonial Gas Co., its unregulated electricity generation operations, including KeySpan Generation LLC and the Ravenswood plants, and smaller diversified activities.

KeySpan's above-average consolidated business profile is supported by the regulated gas distribution operations that provide material stability to cash flow and the relatively low-risk nature of the power generation contracts with the Long Island Power Authority (A-/negative/--), according to S&P.

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