By Nathalie Tadena
Standard & Poor's Ratings Services lifted its outlook on
Kinder Morgan Inc. (KMI) to positive from stable, citing the
midstream energy company's successful execution of its deleveraging
plan as well as its greater size and improved cash flow following
its merger with El Paso Corp.
S&P affirmed Kinder Morgan's rating at double-B, two levels
away from investment grade.
Kinder Morgan acquired El Paso last year in a roughly $21
billion deal that created the largest natural-gas pipeline operator
in North America.
S&P on Friday said it has also revised Kinder Morgan's
business risk profile to "strong" from "satisfactory" due to the
company's improved scale and high percentage of fee-based cash
flows. The ratings firm noted Kinder Morgan's ability to complete
its deleveraging plan and associated asset dropdowns to Kinder
Morgan Energy Partners LP (KMP) and El Paso Pipeline Partners LP
(EPB) could lead to a higher rating.
S&P on Friday also affirmed El Paso Pipeline's rating
triple-B-minus, the first level into investment grade, and revised
the company's outlook to positive. The outlook revision reflects El
Paso Pipeline's increasing scale and diversity.
S&P affirmed Kinder Morgan Energy's rating at triple-B, two
steps into investment grade. The outlook is stable. Earlier Friday,
Kinder Morgan Energy said it has cancelled plans for the $2 billion
Freedom pipeline, a conduit that would have brought a direct stream
of West Texas crude to refiners on the U.S. West Coast.
Last month, Kinder Morgan reported its first-quarter earnings
surged as the year-earlier period included losses from at some
former operations and as revenue climbed, driven by growth at its
Kinder Morgan Energy Partners affiliates as well as a solid quarter
at its El Paso Pipeline Partners.
Kinder Morgan shares closed at $37.98 and were unchanged after
hours. El Paso Pipeline shares closed at $41.09, while Kinder
Morgan Energy shares closed at $83.40.
-Write to Nathalie Tadena at nathalie.tadena@dowjones.com
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