S&P puts Oneok on negative watch

Standard & Poor's said it placed the ratings of Oneok Inc. (BBB) and Northern Border Partners LP (BBB+) on CreditWatch with negative implications and the ratings of Northern Border Pipeline Co. (BBB+) on CreditWatch with positive implications following the announced transactions between Oneok, National Border Partners and a unit of TransCanada PipeLines Ltd. (A-/negative) that will alter the ownership and asset composition of all three entities.

After all transactions are completed, Oneok will own all Northern Border Partner's general partner and about 44% of its limited partnership units, as a result of its purchase of TransCanada's roughly 20% share of the general partner and the drop-down of $3 billion of Oneoks's midstream natural gas, liquids and other assets. Northern Border Partners will more than double in size by adding the Oneok assets. The ownership of Northern Border Pipeline, now owned 70% by Northern Border Partners, will be shared equally with a TransCanada affiliate.

As the impending 100% owner of the general partner of Northern Border Partners, Oneok joins the partnership on CreditWatch due to its transfer of a significant portion of its assets to the credit-constraining master limited partnership structure and the stronger tie to the possibly weakening credit profile of Northern Border Partners, the agency said.

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