Moody's lifts Inergy view to stable

Moody's Investors Service said it changed Inergy, LP's outlook to stable from negative and affirmed the company's Ba3 corporate family and probability-of-default ratings, B1 senior unsecured notes (LGD4, 66%) and SGL-3 speculative grade liquidity ratings.

The agency said the outlook change is supported by the company's reduction in financial leverage that was achieved through a combination of a common equity offering used to repay revolver borrowings and the company's growth of earnings and cash flows, which were driven largely by its leveraged acquisitions over the past year. These events brought the company's debt-to-EBITDA ratio to about 4x at Sept. 30.

The Ba3 corporate family rating is supported by the company's scale based on asset size, by the durable fee-based recurring earnings and diversification provided by Inergy's expansion into the midstream sector and by the company's average profitability, returns, leverage, expected cash flow coverage of interest, cash distributions and capital spending, Moody's said.

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