Moody’s might lift Southern Natural Gas

Moody's Investors Service said it placed the Baa3 senior unsecured rating of Southern Natural Gas Co. under review for upgrade.

The review follows the July 10 announcement that Kinder Morgan Inc. will sell a 50% equity interest in Southern Natural Gas to Southern Co. (Baa2 stable).

Kinder Morgan will use the $1.47 billion sale proceeds to reduce debt. The transaction is subject to Hart-Scott-Rodino approval.

If the proposed transaction does not close, Southern Natural Gas will continue to be 100%-owned by Kinder Morgan and participate in the Kinder Morgan cross-guarantee structure, both as a guarantor of all Kinder Morgan and Kinder Morgan subsidiary debts and as a beneficiary of guarantees of its own debt by Kinder Morgan and its subsidiaries.

If the transaction closes, Southern Natural Gas will be rated on a stand-alone basis.

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