NIAGARA MOHAWK <NMK> DEBT DOWNGRADED BY MOODY'S
Moody's Investors Service Inc said it
downgraded Niagara Mohawk Power Corp's 2.2 billion dlrs of debt
securities and preferred stock.
    Moody's cited cost increases at the utility's Nine Mile
Nuclear Unit 2 and an unfavorable rate decision by the New York
Public Service Commission.
    Cut were the company's first mortgage bonds and secured
pollution control issues to Baa-2 from Baa-1, and Eurobonds,
unsecured pollution control debt, unsecured medium-term notes
and preferred stock to Baa-3 from Baa-2. Niagara Mohawk's
Prime-2 commercial paper was left unchanged.
    Moody's said the rate decision last month by the Public
Service Commission would significantly pressure Niagara
Mohawk's coverage of fixed charges.
    Moreover, cost increases associated with the in-service
delay of the 41 pct owned Nine Mile Unit 2 from September 1987
to early 1988, along with prospective delays, are unlikely to
be recovered under the cost-settlement agreement for the
nuclear unit, Moody's noted.
    The potential write-off would sharply reduce Niagara
Mohawk's common equity and may impair financial flexibility,
the agency said.
 Reuter
