Fitch Rates NiSource Inc.'s Issuance of $145.6MM Debentures 'BBB'.

CHICAGO -- Fitch Ratings has assigned a rating of 'BBB' to NiSource Inc.'s (NI) issuance of $145.6 million senior unsecured debentures due Nov. 1, 2006. The Rating Outlook is Stable. The debentures are part of a remarketing related to NI's 2000 issuance of stock appreciation income linked securities

(SAILS). Each SAIL consisted of a stock purchase contract and a debenture. Pursuant to the stock purchase contract, unless a SAIL holder elects otherwise, the debentures will be remarketed, and the proceeds will be paid to NI. NI will advance the payments to its financial subsidiary, NI Finance Corp. (NI Finance senior unsecured debt rated 'BBB', Stable Outlook), to repay short-term indebtedness and for general corporate purposes.

NI's current ratings and Stable Outlook are supported by the financial strength of its two primary subsidiaries, Northern Indiana Public Service Co. (NISPCO, senior unsecured rated debt rated 'BBB+', Stable Outlook) and Columbia Energy Group (CG, senior unsecured debt rated 'BBB+', Stable Outlook). Currently, almost all of NI's operating income and cash flows will be derived from its regulated gas distribution, gas transmission and storage, and integrated electric businesses. The regulated subsidiaries maintain strong stand-alone credit profiles with stable cash flows and favorable operating characteristics, including solid competitive positions and relatively constructive regulatory environments. Near-term rating concerns for NI include the $1.550 billion of upcoming debt maturities in 2005.

Earlier this year, NI subsidiary, Columbia of Ohio, received an order from the Public Service Commission of Ohio (PUCO), which included the following: extended the Customer Choice program through Oct. 31, 2008, restored the natural gas marketers' responsibility for 75% of Choice costs, and revised the mechanism applicable to the sharing of off-system sales and capacity release revenue. Under the revised mechanism, Columbia of Ohio must now begin sharing such revenue equally with customers when annual revenues exceed $25 million, versus $35 million as originally proposed.

NI is a holding company whose primary subsidiaries are NIPSCO and CG. NIPSCO is a regulated utility serving more than 440,000 electric and 700,000 gas customers in the northern third of Indiana. CG is engaged in the distribution, transmission, and storage of natural gas.