S&P cuts El Paso debt to 4

Standard & Poor's said it affirmed the BB issue-level rating on El Paso Pipeline Partners Operating Co. LLC and revised the recovery rating to 4 from 3. The 4 recovery rating indicates average (30% to 50%) recovery in the event of default.

The rating action follows the revised recovery analysis on the consolidated capital structure of parent El Paso Corp.

El Paso Pipeline Partners LP fully and unconditionally guarantees El Paso Pipeline Partners Operating's unsecured notes. The BB long-term corporate credit rating on El Paso Pipeline Partners is tied to the rating on El Paso Corp.

The rating on El Paso Corp. is on CreditWatch with positive implications, the agency added. The CreditWatch listing reflects the view that El Paso's consolidated credit profile will improve following the spinoff of the exploration and production business.

The exploration and production business is notably riskier than El Paso's pipeline segment due to its cash flow volatility and the significant capital requirements needed to maintain production levels and reserves, the agency said.

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