S&P drops TexGas I bonds after Merrill Lynch downgrade

Standard & Poor's said it lowered its secured debt rating on Texas Municipal Gas Acquisition and Supply Corp.'s (TexGas I) $485 million series 2006A and $1.851 billion series 2006B gas revenue bonds to A from A+. The outlook remains negative.

This rating action follows the June 2 rating action on Merrill Lynch & Co. Inc. (A/negative/A-1), which guarantees the obligations of TexGas I's gas supplier.

TexGas I used the bond proceeds to fund the prepayment of 500 billion cubic feet of natural gas to be supplied by Merrill Lynch Commodities Inc. to TexGas I over 20 years.

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