Moody's upgrades Regency Energy Partners

Moody's Investors Service said it upgraded Regency Energy Partners LP's corporate family rating to Ba2 from Ba3, probability of default rating to Ba2-PD from Ba3-PD and senior bonds to Ba3 from B1, affirmed its speculative grade liquidity rating at SGL-3 and changed the outlook to stable from positive.

"Having closed its $5.6 billion acquisition of PVR Partners, LP, the increased scope and diversity of Regency's midstream operations now warrant this upgrade. While the company's debt leverage remains elevated [at 6 times as of Dec. 31], we expect incremental EBITDA accruing from acquisitions and growth projects and moderating capital spending will lead to reduced levels of debt leverage in 2014 and 2015, Andrew Brooks, a Moody's vice president, said in an agency news release.

The agency said Regency's Ba2 corporate family rating reflects its large size and scale, notwithstanding the financial constraints associated with its master limited partnership structure, its business and geographic diversification and high level of fee-based income derived from recent expansions and acquisitions.

The rating also recognizes Regency's rapid growth and evolving business mix profile, the execution risks associated with a series of rapidly announced acquisitions and its elevated debt leverage, Moody's said.

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