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Fitch downgrades Williams, subsidiaries
Fitch Ratings said it downgraded Williams Cos., Inc.’s (WMB) issuer default rating and senior unsecured ratings are to BB+ from BBB- and junior subordinated ratings to BB- from BB.
Both the senior unsecured debt and the junior subordinated notes have been assigned a recovery rating of RR4. Williams Cos. remains on Rating Watch Negative.
In addition, the agency downgraded Williams Partners LP’s (WPZ) issuer default rating and senior unsecured ratings to BBB- from BBB and short-term issuer default rating and commercial paper rating to F3 from F2.
Also, Williams Partners Finance Corp.’s (WPFC) senior unsecured rating was downgraded to BBB- from BBB.
The issuer default ratings of WPZ's pipeline subsidiaries, Northwest Pipeline LLC and Transcontinental Gas Pipe Line Co., LLC, were also downgraded to BBB from BBB+.
The outlook for WPZ and its two pipeline subsidiaries is stable.
Williams Partners’ rating was placed on Rating Watch Negative following Energy Transfer Equity, LP's announcement in September that it will acquire all of the outstanding shares of Williams Cos. The transaction is expected to close before the end of the second quarter of 2016.
The transaction created uncertainty regarding the future direction of Williams Partners’ balance sheet and credit profile. While the merger has not yet closed, Fitch now expects Williams Partners’ adjusted leverage, defined by Fitch as debt-to-adjusted EBITDA (operating EBITDA less equity income plus distributions from affiliates) to remain above 4.5x for a sustained period of time; this has been Fitch's trigger for a negative action.
Furthermore, the agency’s concern regarding Williams Partners’ significant exposure to Chesapeake Energy Corp. (B/negative) has increased.
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