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Fitch downgrades Kinder Morgan, rates loans BB
Fitch Ratings has assigned BB/RR2 ratings to Kinder Morgan, Inc.'s proposed $7.3 billion senior secured credit facilities, which are expected to include a $2 billion 61/2-year term loan A, a $2.3 billion seven-year term loan B, a $2 billion three-year term loan C and a $1 billion six-year revolving credit facility.
The agency also downgraded Kinder Morgan's issuer default rating to B+ from BBB, notes and debentures to BB/RR2 from BBB, short-term rating to B from F2 and capital trust securities to B-/RR6 from BBB-; downgraded Kinder Morgan Energy Partners, LP's issuer default rating and senior unsecured debt to BBB from BBB+; and affirmed Kinder Morgan Energy Partners' short-term rating at F2.
The outlook is stable. The ratings were removed from Rating Watch negative, where they were originally placed on May 30, 2006 following the announcement of a proposed management-led leveraged buyout of Kinder Morgan. The expected timing for the leverage buyout has been delayed from initial expectations and is now expected to occur late in the second quarter.
The agency said the B+ issuer default rating primarily reflects the company's weak near-term, post-transaction credit fundamentals and the uncertainty and execution risk relating to Kinder Morgan's future structure, operating strategy and financial condition.
Fitch noted that Kinder Morgan asset sales have been proceeding favorably and will result in substantial balance sheet deleveraging. Consequently, the company will likely end 2007 with debt of less than $9 billion, well below the $14.5 billion of debt originally anticipated to be outstanding at the leverage buyout.
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