- Kinder Morgan's (KMI +3.1%) consolidation move has created a windfall for bondholders who invested in the energy empire’s riskiest securities, as credit protection is transferred from Kinder Morgan Energy Partners (KMP +2.9%) to KMI and El Paso Pipeline Partners (EPB +2.8%).
- Creditors of KMI and EPB have seen the market value of their notes rise $468M, while securities of investment-grade Kinder Morgan Partners lost $85M since the Aug. 10 announcement that the three units plus the debt-free Kinder Morgan Management (KMR +3.2%) would be rolled into one.
- Collapsing the corporate structure makes KMI less risky, says Moody's Stuart Miller, in part because it will give the pipeline and terminals company direct access to KMP's cash flows.
- Moody’s is planning to raise KMI and EPB to Baa3 and decrease KMP to that level.
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