S&P cuts DCP Midstream outlook to negative

Standard & Poor's said it revised its outlook on DCP Midstream LLC to negative from stable.

At the same time, the agency said it affirmed DCP's BBB+ long-term and A-2 short-term corporate credit ratings.

The outlook revision reflects its expectation that lower long-term commodity prices will lead to compressed processing and fractionation margins in 2009 and 2010, the agency said, noting that it believes this will result in a substantial decline in DCP's cash flows and financial metrics, given that about 90% of the company's gross margin is exposed to commodity price movements, with hedging only implemented at master limited partnership DCP Midstream Partners, LP.

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