Bloomberg News

Kinder Morgan Deal May Weigh on Partnership Ratings

August 12, 2014

Houston billionaire Richard Kinder’s estimated $44 billion deal to consolidate his pipeline empire will weigh on the credit ratings of two of the publicly-traded partnerships being acquired by Kinder Morgan Inc., according to research firm Gimme Credit LLC.

“While the structure is supportive of low investment-grade ratings, that still means one-notch downgrades,” at Kinder Morgan Energy Partners LP and El Paso Pipeline Partners LP (EPB:US), Philip Adams, a bond analyst at Gimme Credit, wrote today in a report.

Moody’s Investors Service and Standard & Poor’s said yesterday that they are reviewing Kinder Morgan Energy Partners’s ratings for a possible downgrade, according to statements from the credit graders. Kinder Morgan Energy Partners is ranked Baa2 by Moody’s and BBB by S&P.

S&P put El Paso Pipeline Partners LP on watch (EPB:US) for a downgrade, according to data compiled by Bloomberg.

Kinder Morgan Inc., which is rated Ba2 by Moody’s, BB at S&P and BB+ by Fitch Ratings, was placed on review for a possible increase, Bloomberg data (KMI:US) show.

It would be “reasonable to expect” that the three issuers “should all migrate toward” the same ratings, Adams wrote.

Kinder Morgan said in a statement Aug. 10 that it would acquire all of Kinder Morgan Energy Partners, Kinder Morgan Management and El Paso Pipeline Partners. The transaction will lower the cost of capital and make it easier and more profitable for Kinder Morgan to pursue expansion and acquisitions, the company said.

To contact the reporter on this story: Craig Giammona in New York at cgiammona@bloomberg.net

To contact the editors responsible for this story: Shannon D. Harrington at sharrington6@bloomberg.net John Parry, Caroline Salas Gage


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