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Fitch affirms Williams Cos.
Fitch Ratings said it affirmed the debt and issuer default ratings of the Williams Cos., Inc., Transcontinental Gas Pipe Line Corp. and Northwest Pipeline Corp. following the Williams Cos.' announcement about a $1 billion share repurchase program and a pipeline master limited partnership.
The agency affirmed the Williams Cos.' long-term issuer default rating and senior unsecured debt at BB+ and junior subordinated convertible debentures at BB-; Transcontinental Gas Pipe Line Corp.'s long-term issuer default rating and senior unsecured debt at BBB-; and Northwest Pipeline Corp.'s long-term issuer default rating and senior unsecured debt at BBB-.
The outlook is positive.
Fitch said the stock buyback diverts cash from debt reduction or operations investment, but the agency considered the company's significant liquidity as unrestricted cash on hand as of March 31. The ratings also recognize the reduced potential collateral requirements, including cash outlays, after the sale of the company's power segment and the continued roll-off of upstream hedges at levels well below current spot and futures prices, the agency said.
Fitch said it expects consolidated debt levels to remain unchanged following the planned stock buybacks and the proposed dropdowns as the master limited partnerships continue to be consolidated.
Fitch said it placed the Williams Cos.' ratings on positive outlook after the company announced on May 21 that it would sell substantially all of its remaining power assets to Bear Stearns for $512 million. The deal is expected to close in the next few months and is expected to lower business risk by alleviating its heavy cash collateral and letter of credit requirements, the agency said.
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