Moody's affirms Regency Energy Partners

Moody's Investors Service said it affirmed Regency Energy Partners LP's Ba3 corporate family and probability-of-default ratings, B1 (LGD5, 81%) senior unsecured bond rating and SGL-3 speculative-grade liquidity rating.

The outlook remains negative.

The affirmation follows Regency's announcement of a $1.1 billion expansion of its North Louisiana intrastate gas pipeline, Regency Intrastate Gas. The company expects to finance phase I of the project entirely with debt and phase II with a combination of debt and equity financing and has received commitments for about $600 million of debt financing, which it will use to reduce outstanding drawings under its revolving credit facility.

The affirmation reflects Moody's belief that the project will have a positive impact on Regency's overall business risk profile once completed given the long-term transportation contracts expected to underpin the project.

The negative outlook reflects the high degree of execution risk associated with a construction project of this scale, the agency said.

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