NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned a 'BBB' rating to Kinder Morgan Energy Partners, L.P.'s (KMP) $600 million 6.38% notes due 2041 and $500 million 3.50% notes due 2016. Note proceeds will be used to repay $700 million of maturing long-term debt as well as pay off approximately $400 million of commercial paper. KMP's Rating Outlook is Stable.
KMP's ratings and Stable Outlook reflect the following:
--Significant scale and scope of operations;
--Geographic and functional diversity of assets;
--Favorable track record in acquiring, expanding, financing and operating energy assets;
--Predictable earnings and cash flow generated from natural gas and refined products pipelines and bulk and liquids terminal operations;
--A financial and operating profile expected to remain consistent with Fitch Comparative Operating Risk ratio guidelines. KMP's adjusted debt to EBITDA approximated 4 times (x) at Dec. 31, 2010, down from 4.3x for 2009. Based on KMP's current 2011 budget, assuming lower capital spending than in 2010, debt leverage ratios should strengthen over the next 12 months.
Other considerations include the company's relationship with Kinder Morgan, Inc., owner of its general partner interest (KMI; IDR rated 'BB+', with a Stable Outlook by Fitch), exposure to interest rates on approximately $5.4 billion of variable-rate debt, the modestly negative effects of a slowly recovering economy on asset utilization, the company's aggressive expansion spending program and its exposure to changes in commodity prices and volumes for its CO2 business segment.
In early February 2011, certain existing shareholders of KMI sold approximately 95.5 million shares of its common stock in an initial public offering, with a 30-day option to issue additional shares. Upon conclusion of the offering, common stock owned by the public will represent an approximate 13.5% interest in KMI, or approximately 15.5% if underwriters exercise their option to purchase additional shares of common stock in full. The stock offering and related transactions are not expected to have an effect on either KMP's or KMI's ratings.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Corporate Rating Methodology' Aug. 16, 2010;
--'Rating Master Limited Partnerships' Feb. 12, 2008;
--'U.S. Power and Gas Comparative Risk (COR) Evaluation and Financial Guidelines' Aug. 22, 2008.
Applicable Criteria and Related Research:
Corporate Rating Methodology
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=546646
Rating Master Limited Partnerships
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=371982
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