Citing a bigger stake taken by a private investment firm, Standard & Poor’s Ratings Services (S&P) Tuesday lowered by two notches the credit rating of a midstream natural gas pipeline subsidiary of Oklahoma-based OGE Energy Corp. The rating for Enogex LLC was further separated from the diversified utility holding company, OGE.

S&P lowered Enogex’s rating to “BBB-” from “BBB+” while keeping the parent company and its utility, Oklahoma Gas & Electric Co., at “BBB+.” All of the companies, including Enogex, kept “stable” outlooks, according to S&P.

The rating agency cited an “as yet marginal influence” on Enogex’s rating relative to the parent from a “weakening” of the parent-subsidiary relationship in the wake of the private equity firm ArcLight Capital Partners LLC taking a bigger stake in the pipeline (17%) by the end of this year. ArcLight has the opportunity to continue to increase its investment in Enogex, according to the S&P analysis.

S&P credit analyst William Ferara said the bigger stake “pushes the rating on Enogex closer to its standalone rating.” He added that S&P expects ArcLight to further increase its ownership stake in Enogex.

At the same time, the stable outlook on the gas pipeline company reflects the S&P expectation of “steady operational and financial performance and the maintenance of debt to earnings before interest, taxes, depreciation and amortization at or below a 2.5 ratio.” S&P added that it also expects the company to fund its capital needs “conservatively.”

In the future, if the OGE corporate ownership decreases beyond current expectations, S&P could consider further downgrades in Enogex, it said. For the near term, S&P also does not expect to raise the pipeline’s ratings to the level of the parent company.

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