Add to balance / Manage account | User: | Log out |
Prospect News home > News index > List of issuers S > Headlines for Southern Union Co. > News item |
Moody's may lower Southern Union
Moody's Investors Service said it placed under review for possible downgrade the Baa3 senior unsecured debt ratings and Ba2 perpetual preferred securities of Southern Union Co. and subsidiary Panhandle Eastern Pipe Line Co. LLC following Southern Union's announcement that it will acquire Sid Richardson Energy Services Co. for $1.6 billion.
While the current ratings factor in the acquisitive nature of Southern Union, Moody's said that this new foray into an unregulated business would entail additional risk elements which the company would have to address in order to mitigate the related cyclicality, volume and commodity-price risks.
Moreover, the company would need to capitalize this line of business with a far more conservative equity-to-debt component than that reflected in its current capitalization to compensate for the added risks inherent in a gas gathering and processing business, the agency said.
Finally, as Southern Union has recently undergone significant management changes at the executive level, the company's overall corporate strategy and ability to improve corporate governance are still evolving and need to be more clearly defined, the agency said.
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.