Moody's changes Regency view to developing

Moody's Investors Service said it changed the outlook of Regency Energy Partners LP and Regency Gas Services LP to developing from negative after the announcement that Regency's general partner sponsor, private equity firm HM Capital Partners, sold 91% of Regency's general partner and 94% of its subordinated limited partnership units to GE Energy Financial Services for $603 million.

Regency's outlook appears more positive than negative, Moody's said, in light of GE's financial resources and affiliation with an Aaa-rated entity. There's also evidence of willingness to reasonably capitalize its growing portfolio of energy investments.

The ratings remain constrained, however, by Regency's adjusted leverage of 6.7 times, its financial covenants after its $359 million TexStar acquisition in August 2006 and $55 million Pueblo acquisition in April 2007, as well as uncertainty about GE's growth strategy and financial policy for Regency.

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