Moody’s rates Energy Transfer loan Ba2

Moody's Investors Service said it assigned a Ba2 rating to Energy Transfer Equity, LP's proposed offering of a new $500 million senior secured term loan due 2019.

The Ba2 corporate family rating, Ba2-PD probability of default rating, SGL-3 speculative grade liquidity rating and stable outlook are not affected by this action.

Proceeds will be used to repay outstandings under Energy Transfer’s revolving credit facility and for other corporate purposes.

The term loan will be secured by the same collateral that secures Energy Transfer’s existing $1.4 billion term loan facility, a first-priority lien on substantially all of its tangible and intangible assets, comprised principally of its equity interests in its subsidiaries, and will rank pari passu with Energy Transfer’s existing term loan, its revolving credit facility and its senior secured notes.

"Moody's views this term loan offering essentially as a means of building financial flexibility ahead of a transaction between it and Energy Transfer Partners, LP (ETP, Baa3 stable) which will transfer Energy Transfer’s interest in its Bakken pipeline project in exchange for additional ETP class H units," Moody's vice president Andrew Brooks said in a news release. "Neither the transaction itself nor the proposed term loan offering will materially impact Energy Transfer’s debt leverage on either a stand-alone or fully consolidated basis."

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