Moody's rates Copano SGL-3, notes B2

Moody's Investors Service assigned a B1 corporate family rating Copano Energy LLC and a B2 rating to its proposed $225 million of senior unsecured notes. Moody's also assigned a speculative grade liquidity rating of SGL-3 to Copano, which indicates adequate liquidity over the next 12 months.

The outlook is stable.

Proceeds from the offering will be used primarily to repay a $170 million senior term loan facility and borrowings under the company's senior secured revolving credit facility.

Moody's said the ratings are restrained by Copano's small size relative to many of its competitors, the rapid growth of the company over the last couple of years, the short amount of time that it has been a public company, its relative lack of geographic diversification and its aggressive posture with respect to its growth prospects, including expectations of high volume growth from recently acquired assets as well as further acquisitions in a market characterized by what many consider to be high valuations.

The ratings are supported by Copano's position in major natural gas supply areas, relatively moderate downside risk to changes in commodity prices, a lower level of distributions relative to its similarly rated peers and management's track record in successfully integrating over 30 acquisitions since 1992 under the Copano name, the agency said.

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