Moody's lifts PNG view to positive

Moody's Investors Service said it affirmed PNG Cos. LLC's Baa2 senior secured rating and changed the outlook to positive from stable.

The outlook change reflects Aqua America, Inc's. proposal to buy PNG for about $4.3 billion, which includes the assumption of about $1.3 billion in debt, Moody's said.

The transaction is credit positive for PNG because it removes a $230 million term loan supported by PNG and Aqua is viewed as a long-term strategic owner with strong regulatory relationships in PNG's core state of Pennsylvania, Moody's said.

A larger corporate family relieves dividend pressure to support parent-level obligations, the agency added.

The ratings are constrained by the company's private equity ownership and a $230 million term loan at PNG's intermediate holding company, LDC Holdings LLC, Moody's explained.

This debt resulted in weaker consolidated financial metrics since PNG is the only source of dividends to service the intermediate holding company debt, the agency said.

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