Moody's puts Sabine Pass on review

Moody's Investors Service placed Sabine Pass LNG, LP's Ba3 rating for its senior secured notes due 2013 and 2016 under review for possible downgrade.

The agency said the review takes into account Sabine's extensive relationships with Cheniere Energy, Inc. and the growing negative pressures on Cheniere's financial and business prospects.

Recent developments in the LNG and capital markets are likely to result in Cheniere confronting lower than expected cash flow generation and dwindling liquidity over the next two years, Moody's added.

Moody'sdobserves that Sabine represents most of Cheniere's consolidated cash flows and operating assets. Additionally, Sabine has extensive contractual relationships with Cheniere and its affiliates including the terminal use and operations and maintenance agreements. These factors serve as strong incentives to bring Sabine into a possible bankruptcy of Cheniere in order for Cheniere to better control its estate. That being said, Moody's also recognizes certain ring fencing provisions at Sabine including an independent director and separateness requirements.

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