Recipient email addresses will not be used in mailing lists or redistributed.
Use semicolon to separate each address, limit to 20 addresses.
characters you see
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
Don't want to see this again?
Accept our to continue to Moodys.com:
AND SCROLL DOWN!
By clicking “I AGREE” [at the end of this document],
you indicate that you understand and intend these terms and conditions to be
the legal equivalent of a signed, written contract and equally binding, and
that you accept such terms and conditions as a condition of viewing any and all
Moody’s information that becomes accessible to you [after clicking “I AGREE”] (the
“Information”). References herein to “Moody’s” include Moody’s
Corporation, Inc. and each of its subsidiaries and affiliates.
Terms of One-Time Website Use
you have entered into an express written contract with Moody’s to the contrary,
you agree that you have no right to use the Information in a commercial or
public setting and no right to copy it, save it, print it, sell it, or publish
or distribute any portion of it in any form.
acknowledge and agree that Moody’s credit ratings: (i) are current opinions of
the future relative creditworthiness of securities and address no other risk; and
(ii) are not statements of current
or historical fact or recommendations to purchase, hold or sell particular
securities. Moody’s credit ratings and
publications are not intended for retail investors, and it would be reckless
and inappropriate for retail investors to use Moody’s credit ratings and
publications when making an investment decision. No
warranty, express or implied, as the accuracy, timeliness, completeness,
merchantability or fitness for any particular purpose of any Moody’s credit
rating is given or made by Moody’s in any form whatsoever.
3. To the extent permitted by law, Moody’s and its directors,
officers, employees, representatives, licensors and suppliers disclaim
liability for: (i) any indirect, special, consequential, or incidental losses
or damages whatsoever arising from or in connection with use of the
Information; and (ii) any direct or compensatory damages caused to any person
or entity, including but not limited to by any negligence (but excluding fraud
or any other type of liability that by law cannot be excluded) on the part of
Moody’s or any of its directors, officers, employees, agents, representatives,
licensors or suppliers, arising from or in connection with use of the
4. You agree to read [and
be bound by] the more detailed disclosures regarding Moody’s ratings and the
limitations of Moody’s liability included in the Information.
5. You agree that any disputes relating to this agreement or your use of
the Information, whether sounding in contract, tort, statute or otherwise,
shall be governed by the laws of the State of New York and shall be subject to
the exclusive jurisdiction of the courts of the State of New York located in
the City and County of New York, Borough of Manhattan.
04 Jun 2003
MOODY'S UPGRADES THE DEBT RATINGS OF THE WILLIAMS COMPANIES, INC. WITH A DEVELOPING OUTLOOK (TO B2 SR. IMP.)
Over $13 Billion of Debt Securities Affected.
New York, June 04, 2003 -- Moody's Investors Service upgraded the debt ratings of The Williams
Companies (TWC) and its subsidiaries. TWC's senior implied
rating has been raised to B2 from B3 and its senior unsecured ratings
to B3 from Caa1. Moody's changed the rating outlook to developing
from negative. While a number of disclosures have been made,
Moody's concludes that certain events and markets must coincide
for the management to meet its financial plan, and that only the
passage of time will demonstrate the degree of its precision. Failure
of TWC to meet its financial plan, including asset sales and margin
calls as estimated, could result in a downgrade.
These rating actions follow an assessment of TWC's financing plan,
including the recent repayment of $1.2 billion in principal
and interest of its E&P subsidiary Williams Production RMT Company's
(RMT, formerly known as Barrett Resources Corporation) secured loan
(RMT loan) prior to its maturity through recent and currently ongoing
capital market debt offerings and the replacement of its existing secured
credit facilities with a $800 million cash-collateralized
credit facility. The company plans to use this new facility,
together with a large cash balance (the company will have over $2
billion of cash pro forma these transactions) and asset sale proceeds
to provide for liquidity needs over the coming year, including using
it as a reserve for a $1.4 billion debt maturity in 2004.
Moody's rating actions assume that TWC will complete this financing
TWC's ratings reflect significant risks: 1) wide and unpredictable
swings in the working capital needs of its marketing and trading (EM&T)
segment, whose large losses and cash outflows account for much of
TWC's negative cash flow from operations; 2) large net losses
resulting in negative free cash flow; 3) a debt level that remains
stubbornly high (over $13 billion, despite $2 billion
of debt reduced since the beginning of 2002) and weak capitalization (equity
has decreased almost as much as the debt since the beginning of 2002);
and 4) the winding down of its asset sale program, and the expectation
that there will be less cash going forward from asset sales to supplement
shortfalls in operating cash flow. TWC is turning from asset sales
to capital market debt issuances to fund cash shortfalls. While
favorable high-yield capital markets are currently allowing TWC
to raise capital and to supplement its liquidity, TWC may need to
seek further asset sales or other sources of cash, if it fails to
meet its financial plan and the capital markets turn less receptive.
The upgrades reflect the improvement in liquidity position expected from
the above-mentioned financing plan and other imminent transactions
which will: 1) eliminate a large and imminent liquidity hurdle posed
by the large RMT loan maturity and diminish the risk of insolvency for
TWC; 2) release hard assets that secure its existing liquidity facilities,
so that TWC's debt will be largely unsecured (except for the $500
million reserves-backed debt at RMT, $27 million of
Transco Energy's 9-7/8% notes, and non-recourse
project financings, altogether totaling 4% of consolidated
debt) and its assets largely unencumbered (TWC estimates that its encumberable
assets total $5 to $6 billion under its indentures);
3) afford TWC greater financial flexibility as a result of being released
from highly restrictive covenants under its existing liquidity facilities
(such as the required application of asset sale proceeds toward repaying
structured financings -- which were recently paid off --
and required trapping of certain amounts of cash); and 4) lower its
very high interest expense to levels more in line with the current low
The developing outlook reflects the rapidly evolving state of the company
and its ongoing cash deficits. TWC remains in flux and difficult
to forecast even for short periods as it continues to sell numerous assets,
some large and significant to the company. This will continue to
result in unusual gains and losses, possibly including charges from
further asset impairments, to continue to buffet its financial results
as businesses are discontinued and sold. It may be a while before
we see stabilization and a discernible base line for recurring financial
performance, so that there is more certainty in assessing whether
the company can turn and stay cash flow positive.
The largest variable in TWC's financial performance and liquidity
is EM&T's working capital needs. Moody's will monitor
how closely EM&T's future margin needs track currently estimated
ranges in future price environments. Volatility in the current
gas price environment as well as possible price spikes during the winter
of 2003/2004 will provide stress tests to EM&T's models.
Factors that could firm the rating or outlook in the future would include
TWC's demonstrating its ability to turn positive its recurring operating
cash flows and to establish an unequivocal turnaround; increased
transparency in EM&T's liquidity demands and any permanent decline
in the amplitude of their fluctuations; and certainty to its repayment
of the $1.4 billion of 9.25% notes that mature
in March 2004. Factors that could cause a downgrade include the
failure to achieve operating results forecasted; failure to execute
the proposed financing plan; lack of success in selling remaining
assets identified for sale near expected values; higher than estimated
margin calls, adequate assurances, and prepayments; the
deterioration of results at EM&T; and materialization of any
large legal or regulatory contingencies that have not already been settled
or revealed at this time.
TWC has yet to demonstrate its ability to post positive cash flow from
operations and to achieve a measure of repeatability in its overall financial
results. Although its gas pipeline (37% of 1Q03 operating
income), E&P (50%), and midstream (44%)
businesses provide a measure of predictability, their earnings are
more than offset by the large and highly variable losses of EM&T.
Although EM&T's power business has been deemed non-core,
the business is proving difficult to divest, given the depressed
conditions in the power market and long tenors remaining on its tolling
contracts. These tolling contracts require about $400 million
of demand payments a year, which is not fully offset (70%
hedged) by revenues from the load-serving contracts that hedge
Of the roughly $1 billion in liquidity and working capital used
by EM&T, half is used in its power business and the other half
for E&P, midstream, and its remaining petroleum businesses.
These needs come from EM&T marketing products and services on behalf
of those segments and managing the company's price risk management.
Margins, prepayments, and adequate assurances can vary depending
on commodity prices and requirements of TWC's counterparties.
While changes in margins outstanding appear to have lessened since last
summer, they could still be potentially large. Assuming a
one-year holding period and very high gas prices, TWC estimates
that incremental margins would be about $400 million, not
including additional cash outflows from prepayments and adequate assurances.
This number would be in addition to over $400 million of margins
In the quarter ended March 31, 2003, TWC's results,
while improved from the same quarter the prior year, were still
very weak. The company generated a negative $103 million
of cash flow from operating activities against capital expenditures and
investments of roughly $250 million. The company has substantial
leverage, with over $13 billion of debt on its balance sheet,
$8 billion of various obligations off balance sheet (mostly the
undiscounted future payments under tolling agreements, gross of
the offsetting load-serving contracts, and some operating
leases), and common equity of $4 billion. The ratio
of operating income to interest accrued was 0.6 times.
The following ratings have been upgraded with a developing outlook.
Moody's raised TWC's senior implied rating to B2 from B3 and
its senior unsecured ratings to B3 from Caa1. Moody's also
assigned a B3 senior unsecured rating to TWC's proposed notes.
The rating on the company's secured revolver is raised to B1 from
B3 and will be withdrawn, once the proposed new facility is put
in place. TWC's pipeline subsidiaries' senior unsecured
ratings are upgraded to B1 from B3. The ratings of RMT have been
upgraded, with secured term loan rating raised to B1 from B2,
senior implied rating to B2 from B3, and senior unsecured debt to
B3 from Caa1. RMT's Caa1 issuer rating is withdrawn.
The Williams Companies, Inc. -- Senior implied rating
from B3 to B2, senior unsecured issuer rating from Caa1 to B3,
senior secured revolving credit facility from B3 to B1, senior unsecured
debt from Caa1 to B3, senior unsecured/subordinated/preferred shelf
from (P)Caa1/(P)Caa3/(P)Ca to (P)B3/(P)Caa2/(P)Caa3;
Williams Capital I -- Trust preferred stock from Caa3 to Caa2,
trust preferred shelf from (P)Caa3 to (P)Caa2;
Williams Capital II -- Trust preferred shelf from (P)Caa3 to (P)Caa2;
MAPCO Inc. - Senior unsecured debt from Caa1 to B3;
Northwest Pipeline Corporation - Senior unsecured debt from B3
to B1, senior unsecured shelf from (P)B3 to (P)B1;
Transco Energy Company -- Senior secured from B3 to B1;
Transcontinental Gas Pipe Line Corporation - Senior unsecured debt
from B3 to B1, senior unsecured shelf from (P)B3 to (P)B1;
Williams Production RMT Company (formerly known as Barrett Resources Corporation)
- Secured term loan from B2 to B1, senior implied rating
from B3 to B2, senior unsecured debt and issuer ratings from Caa1
Headquartered in Tulsa, Oklahoma, the Williams Companies,
Inc. is a diversified energy services company.
Corporate Finance Group
Moody's Investors Service
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.
CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.
All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.
Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com
under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.
Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.