- Kinder Morgan (KMI -4.4%) slumps to a 52-week low as Moody's changes its credit outlook to negative from stable, warning that a downgrade could follow; if Moody’s reduces its rating from Baa3 to Ba1, KMI officially would be in junk territory.
- The ratings agency says its negative outlook reflects KMI’s increased business risk profile and additional pressure on its already high leverage that will result from yesterday's announced deal to increase ownership in the "distressed" Natural Gas Pipeline Company of America.
- NGPL is facing potential default on its pending interest payments, Moody's says, which suggests that KMI will need to provide cash injections that likely will be debt funded initially.
- SunTrust's Tristan Richardson estimates that NGPL is ~10x levered; the firm maintains its projections and $38 price target for KMI, but expects the call on capital to increase with the transaction.