Moody's may upgrade Williams Partners

Moody's Investors Service said it placed Williams Partners LP's Ba3 corporate family rating under review for possible upgrade following the announcement that the company intends to acquire interests in natural gas gathering and processing assets from the Williams Cos. for $750 million.

The agency said the review for upgrade reflects Williams Partners' greater scale and increased geographic diversification following its acquisition of the Wamsutter assets.

These positive benefits are tempered by the relatively high price Williams Partners is paying, Moody's said. Based on about $80 million EBITDA, Williams Partners is paying 9.4x cash flow, which is a rich multiple historically.

At Sept. 30, Williams Partners' debt-to-EBITDA ratio was 4.1x. The agency anticipates that the company will fund this acquisition with a substantial amount of equity such that its run-rate leverage will improve to its target level under 4x debt to EBITDA.

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