S&P puts Williams on watch

S&P said it placed the BB corporate credit rating and other ratings on the Williams Cos. Inc. on CreditWatch with negative implications.

The 4 recovery rating is unchanged and indicates 30% to 50% expected default recovery.

The 6 recovery rating on the junior subordinated notes also is unchanged and indicates 0 to 10% expected default recovery.

Williams announced in September that it would merge with Energy Transfer Equity LP, S&P said. The negative watch reflects an expectation that Energy Transfer’s stand-alone financial leverage pro forma for the merger will be considerably weaker than previous expectations, the agency explained.

S&P said it revised the assessment of the merged company's pro forma stand-alone debt leverage to negative based on an expectation of a debt-to-EBITDA ratio of nearly 7x in 2016 from previous expectations of between 3.5x and 4x.

The merger transaction also faces both industry and legal headwinds with weaker commodity prices, the agency added.

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