Moody's rates Regency notes B1

Moody's Investors Service said it assigned a B1 rating to Regency Energy Partners, LP's proposed $500 million senior notes.

The proceeds will be used to reduce outstanding borrowings under Regency's revolving credit facility.

The outlook remains positive.

Due to the higher use of debt in the financing mix, Regency's leverage has increased significantly following its April 2011 acquisition of a 30% stake in LDH Energy Asset Holdings LLC, Moody's said.

While the agency said it expects Regency's earnings and cash flow to step up over the next 12 months, additional equity will need to be issued in the future to support a stronger financial leverage profile indicative of a higher rating, the agency said.

The ratings reflects its size and scale with both business and geographic diversification and increasing fee-based income from recent expansions and acquisitions, Moody's added.

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