S&P affirms GulfTerra at BB+

Standard & Poor's said it affirmed its BB+ corporate credit rating on GulfTerra Energy Partners LP (BB+/watch negative/--), which will remain on CreditWatch with negative implications following the announcement of its intention to merge with Enterprise Products Partners LP (BBB-/watch negative/--) and today's downgrade of the corporate credit rating of its primary general partner, El Paso Corp., to B from B+.

"The proposed merger of GulfTerra and Enterprise would be complementary in several ways, including the fit of the operations and the improved corporate governance and management of the new company," said S&P credit analyst Todd Shipman. "The ultimate ratings on the merged entity will depend on a complete analysis of the operations, integration, diversity, sector fundamentals, and financial measures when the merger is closer to completion."

S&P said its evaluation of the relationship between GulfTerra and El Paso was leading toward a conclusion where the steps taken to insulate itself from El Paso and strengthen its corporate governance (in particular, the insertion of Goldman Sachs as a 9.9% owner of its general partner) would result in the near-complete separation of the ratings of GulfTerra and El Paso.

Today's developments supersede those steps, however, and could still affect GulfTerra's ratings during the merger process.

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