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Moody's lifts Southern Star view to positive
Moody's Investors Service said it affirmed the ratings of Southern Star Central Corp. and its subsidiary Southern Star Central Gas Pipeline and changed their outlooks to positive from stable.
The agency said this rating action reflects the significant decrease in leverage as a result of the conversion of preferred shares to common shares, as well as the conclusion of a rate case which increases annual revenues by about $18 million annually and mitigates regulatory risk until the effective come-back date of Nov. 1, 2008.
The rating change also reflects the establishment of Southern Star as a standalone entity after having been sold by The Williams Companies, Inc. in 2002, as well as additional revenue certainty from recent re-contracting, Moody's noted.
The agency added credit metrics have improved as funds from operations/adjusted debt. adjusted to include operating leases and the series A preferred shares before the conversion, has gone from a low of 8.7% at the end of 2003 to 12.8% for the last 12 months ended September as a result of increased revenue due in part to the favorable rate case outcome.
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