Moody’s might lift Regency Energy

Moody's Investors Service said it placed Regency Energy Partners LP's Ba2 corporate family rating and Ba3 unsecured notes rating under review for upgrade.

At the same time, the agency affirmed Energy Transfer Partners, LP's (ETP) Baa3 rating and stable outlook.

These rating actions were prompted by Energy Transfer Partners’ Jan. 26 announcement that it would acquire Regency in a transaction valued at approximately $18 billion. The transaction has no effect on the Ba2 corporate family rating or stable outlook of Energy Transfer Equity, LP (ETE), who holds the general partnership interest in both Energy Transfer Partners and Regency.

"Weak energy commodity prices have pressured valuations in the gathering and processing (G&P) segment of the midstream energy sector," Moody's vice president Andrew Brooks said in a news release.

"Financing the continuing growth of Regency's investment in G&P will benefit from ETP's investment grade balance sheet and lower cost of capital, while ETP will gain additional scale and scope across its diversified midstream asset base through the Regency acquisition."

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