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Moody’s reviews Williams; changes Energy Transfer to positive
Moody's Investors Service said it affirmed Energy Transfer Equity, LP's (ETE) Ba2 corporate family rating, Ba2 senior secured debt rating and SGL-3 liquidity rating, and changed the outlook to positive from stable.
At the same time, the agency placed Williams Cos., Inc.'s (WMB) Baa3 senior unsecured rating on review for downgrade from on review – direction uncertain.
Moody's affirmed the Baa3 senior unsecured rating and Ba1 junior subordinated rating of Energy Transfer Partners, LP (ETP) and stable outlook, and affirmed Williams Partners LP's (WPZ) Baa2 senior unsecured ratings and negative outlook. It also affirmed Baa3 senior unsecured rating and Prime-3 short term rating of Sunoco Logistics Partners LP's wholly owned Sunoco Logistics Partners Operations LP and stable outlook. Additionally, the Baa1 senior unsecured ratings of WPZ's wholly owned pipeline subsidiaries, Northwest Pipeline GP and Transcontinental Gas Pipeline Co. LLC, and their negative outlooks were affirmed.
These rating actions were prompted by ETE's Sept. 28 announcement on that it would combine with WMB in a transaction valued at about $38 billion, which is expected to close in the first half of 2016. ETE has provided for as much as $6 billion of the transaction to be financed with new debt, and ETE will become the co-obligor of WMB's existing term debt, which approximates $4.25 billion. The remainder of the transaction will be financed with ETE equity.
"ETE's positive outlook reflects the far-reaching scope and scale of the proposed energy midstream combination of ETE's and WMB's respective asset bases, which will create the U.S.' largest energy infrastructure company," Moody's vice president Andrew Brooks said in a news release.
"However, debt and leverage will be high and a combination of this scale is bound to present post-closing execution challenges to both entities."
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