Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

 

By clicking “I AGREE”, 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 (the “Information”). References herein to “Moody’s” include Moody’s Corporation. and each of its subsidiaries and affiliates..

 

Terms of One-Time Website Use

 

1.             Unless you have entered into an express written contract with www.moodys.com to the contrary and/or agreed to the Terms of Use at www.moodys.com or ratings.moodys.com, 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.                   

 

2.             CREDIT RATINGS AND MOODY’S MATERIALS FOUND ON WWW.MOODYS.COM OR SITES OTHER THAN RATINGS.MOODYS.COM MAY NOT BE DISPLAYED IN REAL TIME. FOR REAL-TIME DISPLAYS OF CREDIT RATINGS AND OTHER INFORMATION REQUIRED TO BE DISCLOSED BY MIS PURSUANT TO APPLICABLE LAW OR REGULATION, PLEASE USE RATINGS.MOODYS.COM.           

 

3.             You 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.

 

4.             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 Information.     

 

5.             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.​​​

 

6.             You agree that any disputes relating to this agreement or your use of the Information, whether 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.​​​

I AGREE
Rating Action:

Moody's changes Regency Energy's outlook to positive and affirms Southern Union

28 Feb 2013

$2.05 billion rated Regency debt affected; approximately $2.4 billion Southern Union rated debt

New York, February 28, 2013 -- Moody's Investors Service affirmed Regency Energy Partners LP's (Regency) Ba3 Corporate Family Rating (CFR) and its B1 senior unsecured notes rating. The outlook was changed to positive from stable. Moody's also affirmed Southern Union Company's (SUG) Baa3 rating and stable outlook. These actions are in response to Regency's announcement that it will acquire Southern Union Gathering Company, LLC, the owner of Southern Union Gas Services, Ltd. (SUGS) from SUG in a $1.5 billion cash and units transaction. SUG is jointly owned through the intermediate holding company ETP Holdco Corporation (Holdco, unrated) by Energy Transfer Partners, L.P. (Baa3 stable) and Energy Transfer Equity, L.P. (Ba2 stable). ETE also owns the 1.6% General Partnership (GP) interest in Regency and 15% of its Limited Partnership (LP) units.

Issuer: Regency Energy Partners, LP

..Affirmations:

.Corporate Family Rating, Affirmed, Ba3

.Senior Unsecured Rating, Affirmed, B1

.Probability of Default Rating, Affirmed, Ba3-PD

..Outlook Action:

.Outlook, Changed to Positive from Stable

Issuer: Southern Union Company

..Affirmations:

.Senior Unsecured Rating, Affirmed, Baa3

.Subordinated Debt Rating, Affirmed, Ba1

..Outlook, Affirmed, Stable

RATINGS RATIONALE

"The SUGS acquisition, while representing a high EBITDA multiple for natural gas gathering and processing (G&P), will be 60% equity-financed by Regency, and is highly complementary with Regency's existing Permian Basin G&P operations. Moreover, the acquisition will further enlarge the already sizable scope and scale of Regency's midstream footprint," commented Andrew Brooks, Moody's Vice President. "We understand that SUG will use the transaction's cash proceeds to reduce debt commensurate with the reduction in assets and EBITDA represented by the sale of SUGS, leaving its credit profile reasonably intact."

Regency's positive outlook reflects our expectation that elevated debt leverage will subside as the integration of SUGS and new growth projects begin to generate incremental EBITDA. Presuming Regency successfully integrates SUGS into its existing G&P asset base and executes on its growth initiatives, its rating could be upgraded. At the same time we would expect Regency to restore debt to EBITDA to below 5x while maintaining operating margins from fee-based sources in the 70% range. Ratings could be downgraded should peak leverage not begin to trend down. Additionally, should the credit of ETE or ETP materially weaken, or should ETE or ETP aggressively pressure Regency for higher distribution payouts, a negative rating action could be considered.

Regency is a publicly traded master limited partnership (MLP) whose midstream operations consist of natural gas G&P, gas pipeline transmission and natural gas liquids (NGLs) transportation, processing and fractionation. SUGS consists of a 5,600 mile natural gas gathering system together with associated processing and treating plants located in West Texas' Permian Basin. It was originally acquired by SUG in March 2006 for $1.6 billion. Regency plans to fully integrate SUGS into its existing Permian Basin G&P system, generating potentially significant upside to EBITDA through synergies, efficiencies and ongoing organic growth.

The $1.5 billion acquisition will be funded by Regency with $600 million of debt and $900 million in Regency units issued to SUG, giving SUG an approximate 18% ownership position in Regency. Consequently, Regency's debt leverage, 5.03x at September 30 (reflecting Moody's standard adjustments), is expected to rise nominally to about 5.2x in 2013 before declining below 5x as a result of anticipated EBITDA growth and capital spending declines. Through growth capital spending and acquisitions, we expect Regency to more than double its EBITDA over the period 2010 to 2013.

We expect SUG to use the cash proceeds from the sale of SUGS to repay debt at SUG or its wholly-owned subsidiary, Panhandle Eastern Pipe Line Company, LP (PEPL, Baa3 stable), maintaining its debt leverage roughly equivalent to pre-sale levels that approached 5x. Following the previously announced sale of its two local gas distribution companies (LDCs) for $1.035 billion, expected to close in the second-half of 2013, SUG will essentially be an owner of interstate gas pipelines.

Regency should have adequate liquidity through 2013, which is captured in its SGL-3 Speculative Grade Liquidity (SGL) rating. At December 31, Regency reported $53 million of cash and $192 million of borrowings outstanding under its $1.15 billion secured revolving credit facility. The revolver is scheduled to expire in June 2014. Regency should have sufficient cushion under its three financial covenants over the next 12 months. Its leverage ratio (debt/EBITDA) is limited to 5.25x, with secured debt/EBITDA limited to 3.0x. Covenant language is such that it permits Regency to employ an adjusted EBITDA for projects in construction to account for the lag in EBITDA attributable to debt-financed growth. The minimum interest coverage ratio is set at 2.75x EBITDA. The $1.15 billion revolving credit facility is secured by all assets, although Regency has an asset base significantly in excess of the $1.15 billion revolver, which could afford it the ability to raise additional liquidity through asset sales.

SUG maintains a $700 million unsecured revolving credit facility that is scheduled to mature in May 2016; at September 30, SUG had $251 million of borrowings outstanding under the revolver. The pending sale of its two LDCs later in 2013 should generate additional proceeds for debt reduction. SUG's capital spending is declining and expected to be within cash flow over the course of the year.

Regency's Ba3 CFR reflects its large size and scale, its business and geographic diversification and high level of fee-based income derived from recent expansions and acquisitions. The ratings also recognize Regency's rapid growth and evolving business mix profile, the execution risks associated with its growth projects, increased structural complexity and its elevated leverage. Growth capital spending and the acquisition of SUGS will cause leverage to exceed 5.0x EBITDA in 2013, although leverage is expected to decline as growth projects reach completion and integration efficiencies are achieved at SUGS. The rating is further supported by Regency's track record of issuing equity and its commitment to the balanced funding of growth capital spending. Moody's also takes into account ETE's control of Regency through its GP interest, recognizing that ETE also looks to Regency to help fund its own distributions and debt service obligations.

SUG's stable outlook reflects the low relative business risk of its regulated interstate pipeline assets, offset by its high debt leverage and the overhang of a complex ownership and organizational structure. While a ratings upgrade is considered unlikely given the operating control ETP exercises over SUG, material de-leveraging could warrant an upgrade. Conversely, should leverage metrics deteriorate from current 5x levels, or should its business mix expand away from its interstate pipeline asset base, a downgrade could be considered. Furthermore, a downgrade of ETP or ETE would likely result in a downgrade of SUG's ratings.

Regency's B1 senior unsecured note rating reflects its overall probability of default, to which Moody's assigns a PDR of Ba3-PD, and a loss given default of LGD4-63%. The size of the $1.15 billion secured revolving credit results in a single notching of the senior unsecured notes below the Ba3 CFR under Moody's Loss Given Default Methodology.

Regency Energy Partners LP is a midstream MLP headquartered in Dallas, Texas. Its general partner is Energy Transfer Equity, L.P., also headquartered in Dallas, Texas. Southern Union Company is midstream pipeline company headquartered in Houston, Texas, controlled by Energy Transfer Partners, L.P.

The principal methodology used in this rating was the Global Midstream Energy Industry Methodology published in December 2010 and Natural Gas Pipelines Industry Methodology published in November 2012. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Andrew Brooks
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Steven Wood
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's changes Regency Energy's outlook to positive and affirms Southern Union
No Related Data.
© 2022 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 CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. 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 APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER 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. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS 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, ASSESSMENTS, OTHER OPINIONS, AND 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, ASSESSMENTS, OTHER OPINIONS OR 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.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND 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 its 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, ASSESSMENT, 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 credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service 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 credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY100,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.