Williams Partners L.P. WPZ and its rated subsidiaries’ outlook were downgraded to negative from stable by Moody's Investors Service. The revision in ratings follows the announcement that Williams' Board of Directors has decided to look for several strategic alternatives in regard to the buyout offer received by the firm. Credit rating downgrade from a reputed agency like Moody’s has its implications as it limits borrowing capacity.
In May, Williams Companies Inc. WMB – the general partner of Williams Partners – had announced that it would acquire the partnership in a $13.8 billion all stock-for-unit deal. The deal is expected to close in the third quarter of 2015, following necessary regulatory filings and shareholder approvals. Post completion of the merger, Williams Partners will become a wholly-owned subsidiary of Williams. Notably, Williams itself had received an unsolicited buyout offer worth $48 billion a couple of days back, which it rejected. Though Williams did not mention the name of the bidder, media sources believe that the firm is Energy Transfer Equity ETE.
Keeping in line with this, Moody's affirmed Williams Partners’ Baa2 senior unsecured ratings and Prime-2 short-term rating, and the Baa1 ratings of the partnership’s wholly-owned pipeline subsidiaries – Northwest Pipeline (Northwest) and Transcontinental Gas Pipeline Company (Transco).
Williams Partners is an energy master limited partnership engaged in the gathering, transportation, treating and processing of natural gas as well as fractionation and storage of NGLs. The partnership owns interest in three major interstate natural gas pipelines that together deliver 14% of the natural gas consumed in the U.S. The partnership’s gathering and processing assets include large-scale operations in the U.S. Rocky Mountains as well as onshore and offshore Gulf of Mexico.
We remain optimistic about Williams Partners’ midstream and pipeline sectors, and expect growing cash flows from these assets. The partnership is poised to benefit from the rebound in industrial activity that will see greater natural gas demand in the form of NGL.
Williams Partners currently carries a Zacks Rank #3 (Hold). A better-ranked stock from the same space – BP plc BP – sports a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment