KEY RATING DRIVERS
Rating Rationale: KMP's rating and Stable Outlook reflect the significant and growing scale and scope of operations; geographic and functional diversity of assets; successful track record in acquiring, expanding, financing and operating energy operations; and predictable earnings and cash flow generated from natural gas and refined products pipelines. The rating also considers Fitch's expectation for stable credit metrics in 2014 with adjusted debt to EBITDA to approximate 4.0x or below for the year. Moreover, recent large acquisitions have been funded in a credit-neutral manner. KMP raised
KMP remains an active acquirer: On
Other considerations and credit concerns include KMI's control over KMP; exposure to interest rates on approximately
Liquidity is adequate: KMP has a
KMI is the owner of the 2% general partner and approximately 10% limited partner interests in KMP. KMI acquired
Positive: Future developments that may, individually or collectively, lead to positive rating action include:
--A lessening of consolidated business risk as the company acquires and expands pipeline and fixed-fee businesses;
--A material improvement in credit metrics with sustained leverage at 3.5x or below.
Negative: Future developments that may, individually or collectively, lead to a negative rating action include:
--Increasing leverage to support organic growth and acquisitions;
--Weakening operating performance;
--Sustained debt/EBITDA above approximately 4.25x.
--'Corporate Rating Methodology, Including Parent and Subsidiary Linkage'
--'Rating Pipelines, Midstream, and MLPs - Sector Credit Factors'
--'2014 Outlook: Natural Gas Pipelines'
--'2014 Outlook: Midstream Services'
--'2014 Outlook: Crude Oil and Refined Products Pipelines'
--'NGL Pipelines: Northeast Surplus Drives New Projects,
--'Credit Considerations for the GP/LP Relationship'
--'Tax Event Risk and MLPs: Assessing a Change in Tax Law Status for MLPs'
Tax Event Risk and MLPs: Assessing a Change in Tax Status for MLPs
Credit Considerations for the GP/LP Relationship
NGL Pipelines: Northeast Surplus Drives New Projects
2014 Outlook: Crude Oil and Refined Products Pipelines
2014 Outlook: Midstream Services
2014 Outlook: Natural Gas Pipelines
Rating Pipelines, Midstream and MLPs -- Sector Credit Factors
Corporate Rating Methodology: Including Short-Term Ratings and Parent and Subsidiary Linkage
Source: Fitch Ratings
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