Nov 27, 2009 (The Times - McClatchy-Tribune Information Services via COMTEX News Network) --

NiSource Inc. received a boost from Moody's Investors Services this week when the Merrillville-based company had its investment-grade Baa3 credit rating confirmed and its outlook raised to stable from negative.

Moody's cited the resolution of several rate cases at NiSource subsidiaries and the resolution of "legacy" issues as prompting the hike in NiSource's outlook.

Although the outlook boost applied to NiSource's credit rating and is aimed primarily at bondholders, such changes are also important to stockholders. Companies suffering credit downgrades, particularly below investment grade, will often cut their quarterly dividend.

On Wednesday, NiSource spokesman Mike Banas said the company plans to maintain its current quarterly dividend of 23 cents per share for stockholders.

NiSource stock was up 17 cents per share on Tuesday, the day of the Moody's action, and moved up 39 cents to $14.47 per share on the New York Stock Exchange Wednesday.

Moody's in its action also noted the "long and contentious" electric rate case at NiSource's NIPSCO subsidiary and stated its outcome is important to the parent company's credit profile.

NiSource has 3.7 million energy customers in the Midwest, East and Mid-Atlantic states. That includes 712,000 natural gas customers and 457,000 electric customers at NIPSCO in Indiana.

"Since we assigned the negative outlook, NiSource has undergone a series of rate proceedings and resolved various legacy issues that were overhangs on the credit," said Moody's Vice President Mihoko Manabe. "Their credit metrics are still weak, but they should be durable because of their improved business risk profile."

NiSource CEO Robert Skaggs Jr. welcomed Moody's action, stating his company's current business and liquidity strategies have helped it weather the severe economic downturn.

"NiSource has made great strides over the past year to enhance the company's liquidity and financial position, and we're pleased Moody's has recognized our progress by raising its outlook on the company to stable," Skaggs said.

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