Moody’s changes Kinder Morgan to stable

Moody's Investors Service said it changed Kinder Morgan Inc.'s outlook to stable from negative and affirmed its Baa3 senior unsecured and Prime-3 commercial paper ratings.

On Dec. 8, Kinder Morgan announced that would reduce its annual dividend to $1.1 billion from about $4.4 billion and reduce its targeted ratio of net debt to EBITDA to 5.5 times from 5.6 times.

"The change in outlook to stable reflects the very significant change Kinder Morgan has made to its dividend policy, slashing its 2016 dividend by 75% and thereby eliminating its 2016 reliance on debt and equity markets access. Negative free cash flow in 2016 of about $2.2 billion, which includes debt maturities totaling $1.7 billion, could be funded under the company's revolving credit facility," Moody's senior vice president Terry Marshall said in a news release.

"Kinder Morgan is also slightly reducing its target leverage, which will remain high at about 5.7x on a Moody's adjusted basis. However, Kinder Morgan will have much greater flexibility in managing its leverage with the elimination of its reliance on equity capital markets access."

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