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Moody's changes Kinder Morgan's outlook to negative

Staff writer |
Moody's Investors Service changed Kinder Morgan's outlook to negative from stable. Moody's affirmed KMI's Baa3 senior unsecured and Prime-3 commercial paper ratings.

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On November 30, KMI announced an agreement to increase its ownership in Natural Gas Pipeline Company of America LLC (NGPL, Caa2 negative) to 50% from 20% for approximately $136 million. Brookfield Infrastructure Partners L.P. will own the remaining 50%.

Proportionate consolidation of NGPL's debt will add about $1.5 billion to KMI's consolidated debt. NGPL's trailing twelve month September 30, 2015 EBITDA was $273 million (gross).

"The negative outlook reflects Kinder Morgan's increased business risk profile and additional pressure on its already high leverage that will result from its agreement to increase ownership in NGPL, a distressed company," said Terry Marshall, Moody's Senior Vice-President.

"NGPL is facing potential default on its pending interest payments, suggesting that KMI will need to provide cash injections, which will likely be debt funded initially."


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