20180126Avista to Staff_DR_019.docx

AVISTA CORP.
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:OregonDATE PREPARED:09/26/2017
CASE NO.:UM 1897WITNESS:Mark Thies
REQUESTER:PUC StaffRESPONDER:Jason LangTYPE:Data RequestDEPT:Finance
REQUEST NO.:Staff– 019(AVA)TELEPHONE:[phone]EMAIL:[e-mail]:Please discuss Avista’s current access to each now relied upon debt and equity market and flotation method, inclusive of private placement, in comparison to access to each available type of financing post-merger through Hydro One both in current and in stressed conditions. In this discussion, please address the possible loss or severance of relations with investors both: a) directly in AVA, and b) through entities like Blackrock, The Vanguard Group, State Street, Fidelity, and PIMCO which have governance with a U.S. focus.RESPONSE:Avista will continue to access the debt capital markets following the acquisition by Hydro One for long-term fixed income securities, such as senior secured notes, mortgage bonds, unsecured debt and hybrid securities such as the junior subordinated notes in the same manner as it does currently and will continue to be subject to market conditions in the debt markets.A benefit of the transaction isthe neutral to improved credit supportby the rating agencies as highlighted in Avista’s response to Staff_DR_015(AVA). In challenging credit markets, where investors are less likely to buy corporate bonds(as opposed to U.S. Government bonds), a stronger credit rating will attract more investors, and a weaker credit rating could reduce or eliminate the number of potential investors. Thus, weaker credit ratings may result in a company having more difficulty accessing capital markets and/or incurring higher costs when accessing capital.Following the transaction, Avista will no longer have common stock that is publicly traded. Its common stock will be delisted from, and will no longer be traded on, the New York Stock Exchange or any other securities exchange, and will be deregistered under the Securities Exchange Act.Hydro One will provide equity to support Avista’s capital structure so Avista will benefit by no longer needing to access the capital markets for equity and will no longer be subject to market conditions for equity.