Moody's rates Energy Transfer notes Ba2

Moody's Investors Service said it assigned a Ba2 (LGD4) rating to Energy Transfer Equity, LP's proposed offering of $750 million senior secured notes due 2027. 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 outstanding borrowings under Energy Transfer Equity's revolving credit facility and for other corporate purposes.

The agency said the Ba2 corporate family rating recognizes the extensive size and scope of Energy Transfer Equity's indirectly held midstream asset base but is cognizant of its aggressive growth aspirations and the organizational complexity of its partnership structure.

The rating is also heavily influenced by Energy Transfer Partners, LP's Baa3 rating in recognition of the roughly 74% of Energy Transfer Equity's cash flow, pro forma for Energy Transfer Partners’ April 30 acquisition of Regency Energy Partners LP (Baa3/stable), that is derived through distributions received from Energy Transfer Partners, Moody’s said. Debt at Energy Transfer Equity is structurally subordinated to about $30 billion of outstanding debt at Energy Transfer Partners (proportionately consolidated) and its respective subsidiaries and holdings, whose cash distributions to Energy Transfer Equity are residual to their own substantial operating and debt service requirements.

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