S&P cuts Williams Partners subsidiaries

Standard & Poor's placed its BBB- corporate credit rating and issue ratings on Williams Partners LP (WPZ) and its wholly owned subsidiaries, Northwest Pipeline LLC and Transcontinental Gas Pipe Line Co. LLC, on CreditWatch with negative implications.

In addition, S&P lowered its corporate credit rating on Williams Cos., Inc. (WMB) to BB from BB+, and removed the rating from CreditWatch, where it was placed with negative implications on Dec. 15. The outlook is stable.

At the same time, S&P lowered its ratings on WMB’s senior unsecured debt to BB from BB+, lowered the junior subordinated rating to B+ from BB-, and lowered the preferred stock rating to B from B+.

“The CreditWatch listing follows our downgrade of Chesapeake Energy Corp. to CCC+ from B, translating into materially worse counterparty risk at WPZ [roughly 20% of estimated 2016 EBITDA], as well as the pressure that continued low hydrocarbon prices bring to WPZ's cash flows,” said S&P credit analyst Nora Pickens in a news release. The heightened risk of a Chesapeake default creates added uncertainty regarding payments to WPZ.

S&P also notes the poor economic returns for exploration and production companies in the current hydrocarbon price environment, particularly in the Barnett and Haynesville where WPZ's assets are positioned.

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