S&P rates Colonial Pipeline notes A

Standard & Poor's said it affirmed Colonial Pipeline Co.'s A corporate credit rating and assigned an A rating to its proposed $250 million senior unsecured notes due 2037.

The outlook was revised to negative from stable.

Proceeds will be used to repay existing $150 million notes due 2007 and short-term borrowings.

The ratings reflect the firm's strong business and intermediate financial risk profiles, its superior market position, regulation that supports credit quality, access to Gulf Coast refineries and Northeast markets, and its renewed focus on core pipeline operations, S&P said.

These strengths are partly offset by an uneven but improving operating record and intermediate financial profile, the agency said.

The negative outlook reflects the sizable capital requirements likely required for the mainline expansion, estimated at $2 billion and that would result in longer-term deterioration of financial metrics, S&P said.

For the 12 months ended March 31, the company reported debt-to-EBITDA ratio of 2.6 times.

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