S&P keeps Williams Cos. on positive watch

Standard & Poor's said its BB+ corporate credit ratings on The Williams Cos. Inc. and affiliates will remain on CreditWatch with positive implications, following the company's announcement of its planned new publicly traded gas pipeline master limited partnership and $1 billion stock repurchase program.

The ratings on Williams and its affiliates were placed on CreditWatch on May 21, S&P said.

The agency said that Williams intends to fund the stock repurchase with its sizable cash balance and to use equity proceeds from the MLP to replenish cash and fund growth projects.

"The announcement of the planned MLP is consistent with our expectation that dropdowns of pipeline assets would accelerate, following the recent court ruling affirming the FERCs tax allowance policy," noted S&P credit analyst Plana Lee.

The agency added that it believes that this would be neutral at best for Williams' credit quality, depending on its use of proceeds and the capitalization of the MLP, because of the risks associated with the MLP structure, as well as the distance that the MLP will place between Williams lenders and the pipeline assets.

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