DBRS Confirms Kinder Morgan Energy Partners, L.P. and Kinder Morgan, Inc.

DBRS has today confirmed the Issuer Rating and the Medium-Term Notes & Unsecured Debentures of Kinder Morgan Energy Partners, L.P. (KMP) at BBB (high). Concurrently, DBRS has confirmed the Issuer Rating and the Senior Notes and Debentures of Kinder Morgan, Inc. (KMI) at BB and the recovery rating of RR4 for KMI’s Senior Notes and Debentures. All ratings have Stable trends.

KMP’s ratings reflect its diversified energy infrastructure asset base that provides stable cash flows from regulated fee-based business with medium- to long-term contracts. KMP’s financial profile has improved with prudent financing of recent acquisitions through issuance of equity, with DBRS-adjusted debt-to-capital falling to 58% at last 12 months June 2013 from 63% in 2011. All other credit metrics remained within the current DBRS rating category.

KMI’s ratings reflect its diversified sources of cash flow from investments. DBRS notes that the ratings are constrained by KMI’s relatively high debt levels and the structural subordination of the debt at KMI to all debt at KMP and its subsidiaries. With a major drop down of assets to KMP and its subsidiaries in 2012 to 2013, debt levels at KMI have reduced and DBRS expects this trend to continue as KMI’s drop-down strategy continues.

KMP’s $5 billion acquisition of Copano Energy LLC (Copano) closed on May 1, 2013. In February 2013, DBRS noted that while the acquisition adds scale to KMP’s midstream operations, approximately 30% of Copano’s cash flow is derived from commodity price sensitive contracts that moderately impacts KMP’s business risk profile (refer to DBRS press release February 1, 2013).

Notes:
All figures are in U.S. dollars unless otherwise noted.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodology is Rating North American Pipeline and Diversified Energy Companies (May 2011), which can be found on our website under Methodologies.