S&P affirms Enterprise Products

Standard & Poor's said it affirmed Enterprise Products Partners LP's BB+ corporate credit and senior unsecured debt ratings following the agency's annual review of the company. The outlook is stable.

S&P said the ratings on Enterprise Products reflect the partnership's integrated energy midstream operations, favorable asset positioning, large proportion of stable fixed fee revenues, a shift to onshore growth from the riskier offshore and an appropriate mix of equity funding for new growth projects.

Offsetting these strengths are the partnership's aggressive growth, a likely decline in distribution coverage as much of recent capital spending will not generate immediate returns and cash flow volatility stemming from volume risks associated with its natural gas gathering and processing businesses, the agency said.

S&P said the rating also reflects the company's reliance on a single individual, Dan Duncan, who through his privately owned EPCO Inc. and other family interests, owns 86% of Enterprise GP Holdings LP, which owns Enterprise Products' general partner, Enterprise Products GP LLC, and 31% of Enterprise Products' partnership limited units and effectively controls the board of directors even though the reorganized nine-member board has three independent members.

Debt to EBITDA was about 4.5x at the end of 2005.

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