Moody's: EQM and Equitrans outlooks to negative

Moody's Investors Service said it changed EQM Midstream Partners, LP's and Equitrans Midstream Corp.’s outlook to negative from stable. Concurrently, Moody's affirmed EQM's Ba1 corporate family rating, Ba1-PD probability of default rating and its Ba1 senior unsecured notes rating. Additionally, Moody's affirmed Equitrans' Ba3 rating, Ba3-PD PDR and its Ba3 term loan rating. The speculative grade liquidity rating remains SGL-3 for EQM and ETRN.

These rating actions were precipitated by Moody's recent ratings downgrade of EQT Corp. to Ba1 CFR with a negative rating outlook, pending contract renegotiations between EQM and EQT Corp. and, multiple delays and budget overruns in Mountain Valley Pipeline project.

“EQM's reliance on EQT as an anchor shipper and EQT's weakening credit profile poses a risk to EQM's cash flow and its ability to improve its financial leverage. Additionally, the uncertainty around Mountain Valley Pipeline (MVP) project's completion and its multiple budget overruns also factor into the outlook change,” said Sreedhar Kona, a Moody's senior analyst, in a press release. “ETRN's negative rating outlook reflects its structural subordination to the debt at EQM and its standing as a holding company reliant on distributions from EQM.”

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