Moody's may lower Energy Transfer; note outlook to negative

Moody's Investors Service said it placed under review for possible downgrade Energy Transfer Equity, LP's Ba1 corporate family rating and Ba2 long-term debt rating.

The agency also said it affirmed Energy Transfer Partners, LP's Baa3 senior unsecured note rating and changed the outlook to negative in response to news that Energy Transfer Equity would acquire Southern Union Co. in a transaction valued at $7.9 billion.

Moody's also said it affirmed the Baa3 long-term debt ratings and stable outlook of Southern Union and its subsidiary, Panhandle Eastern Pipeline, along with Regency Energy Partners LP's Ba3 corporate family rating with positive outlook.

The downgrade review on Energy Transfer reflects the financing of the acquisition from a position of already strained leverage for the group, the increase in fixed charges tied to the newly issued series B preferred units distributions, the degree of execution and integration risk inherent in absorbing operations of Southern Union's scale, the agency said.

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