Moody's rates Kinder Morgan loans Ba2

Moody's Investors Service said it assigned provisional Ba2 ratings to the proposed senior secured credit facilities to be used to help finance the management buyout of Kinder Morgan, Inc.

The Ba2 rating is indicative of where Moody's expects Kinder Morgan's existing Baa2 debt ratings to fall once the existing debt and the new credit facilities are secured and guaranteed on a pari passu basis. The Baa1 debt ratings of Kinder Morgan Energy Partners, LP - Kinder Morgan's master limited partnership vehicle - are likely to fall to Baa2 and subsidiary Terase Inc.'s Baa2 debt ratings are likely to fall to Ba2 when and if the buyout occurs, the agency said.

The companies' ratings remain under review for possible downgrade until there is more certainty as to the consummation of the buyout, which Kinder Morgan expects to occur in the first quarter of 2007.

A three-notch downgrade for Kinder Morgan would reflect its debt doubling as a result of the buyout, Moody's said, adding that Kinder Morgan's debt-to-capital on a tangible net worth basis will likely be well over 100% pro forma for the transaction, leaving it the most weakly capitalized by that measure among Moody's peer group of diversified gas companies.

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