Businessweek

The following is a press release from Standard & Poor's: -- U.S. midstream energy transport and storage company Kinder Morgan Energy Partners L.P. (KMP) has completed its acquisition of 100% of El Paso Natural Gas Co. (EPNG) and former El Paso midstream assets for about $1.655 billion, including about $560 million of proportional debt at EPNG. -- We are raising our corporate credit and issue-level ratings on EPNG to 'BBB-' from 'BB'. The outlook is stable. -- The stable rating outlook on EPNG reflects an expectation of broadly stable, albeit slightly declining, cash flows and steady operational performance. We have not yet factored the proposed KM Freedom Pipeline into our view of EPNG's credit quality given that the proposal is not firm and its timeframe is long-dated. NEW YORK (Standard & Poor's) March 7, 2013--Standard & Poor's Ratings Services said today it raised its corporate credit and issue-level ratings on natural gas transportation company El Paso Natural Gas Co. (EPNG) to 'BBB-' from 'BB'. In addition, we withdrew our recovery rating on the senior unsecured debt because this debt is now investment grade. The outlook is stable. Standard & Poor's corporate credit rating on EPNG reflects its "satisfactory" business risk profile and "significant" financial risk profile, as our criteria define the terms. We assess EPNG's stand-alone credit quality at 'BB+'. While we provide some degree of ratings uplift for EPNG compared with KMP's rating, we do not fully align EPNG's rating with that of KMP. This reflects our view that EPNG is not a core subsidiary of KMP due principally to its relatively small size compared with KMP's other businesses. EPNG is a wholly owned subsidiary of KMP, which is Kinder Morgan Inc.'s master limited partnership (MLP). As of Sept. 30, 2012, EPNG had about $1.35 billion of reported debt. "The stable outlook on EPNG reflects an expectation of slightly declining cash flows and steady operational performance," said Standard & Poor's credit analyst William Ferara. We have not yet factored the proposed KM Freedom Pipeline into our view of EPNG's credit quality given that the proposal is not firm and its timeframe is long-dated. We could raise EPNG's rating if EPNG's stand-alone credit quality were to improve. This could occur from a strengthened business risk profile stemming from a longer contract length or enhanced competitive position. We could lower EPNG's rating if its stand-alone credit quality weakened. This could occur if the company's contract length were to notably shrink, and thus lead to higher cash flow uncertainty, or debt leverage were to increase above 6x on a sustained basis. RELATED CRITERIA AND RESEARCH Key Credit Factors: Criteria For Rating The Global Midstream Energy Industry, April 18, 2012 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column. Primary Credit Analyst: William M Ferara, New York (1) 212-438-1776; bill_ferara@standardandpoors.com Secondary Contact: Michael V Grande, New York (1) 212-438-2242; michael_grande@standardandpoors.com