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S&P places Ruby Pipeline on watch
S&P said it placed the BBB- issuer credit rating on Ruby Pipeline LLC on CreditWatch with negative implications, along with the BBB- rating on the company's senior unsecured debt.
The negative watch follows the recent downgrade of PG&E Corp. to B from BBB-.
PG&E accounts for over one-third of Ruby's contracted volumes, the agency said. Therefore, Ruby's operating cash flow could decline significantly if PG&E fails to honor its offtake obligations.
In addition, about 65% of Ruby's contracts expire in 2021 and many of these contracts currently pay above-market rates, which presents increased re-contracting risk that could weaken the company's credit quality, S&P said.
The CreditWatch negative placement reflects a view that the deterioration of PG&E's credit quality could negatively affect Ruby Pipeline if PG&E fails to honor its obligations as an anchor tenant.
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