Fitch cuts Energy Transfer to negative

Fitch Ratings said it affirmed and removed Energy Transfer Equity, LP's ratings, including its BB- issuer default rating, from Rating Watch positive where they were placed on June 16. The outlook is stable.

Fitch affirmed Energy Transfer Partners, LP's issuer default rating and senior ratings at BBB- and revised the outlook to negative from stable.

The rating actions incorporate the financial implications of the most recent changes to the terms of Energy Transfer Equity's proposed acquisition of Southern Union Co. (BBB-/Rating Watch negative), the agency said.

Under the terms of the revised merger agreement Southern Union shareholders can elect to exchange their common shares for $44.25 of cash or a like value of Energy Transfer Equity common units, the agency said.

The removal from Rating Watch positive reflects the increased purchase price of the amended merger agreement and the resulting anticipated leverage at Energy Transfer Equity, the agency added.

Energy Transfer Partner's negative outlook reflects anticipated increased leverage resulting from its aggressive growth strategy that involves significant capital contributions to joint ventures in the 2011 to 2012 time frame, the agency said.

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