While affirming the Iroquois Gas Transmission System LP’s credit ratings (“BBB+”) and positive outlook, Standard & Poor’s Ratings Services noted it will keep an eye on the Northeast interstate natural gas pipeline’s shipper base and cash flow. If they waver S&P said it might consider changes in the ratings and outlook.
S&P said it doesn’t anticipate any problems and expected the pipeline to successfully refinance $210 million in debt that matures next year. S&P said its affirmation is based on a number of periodic reviews of the pipeline’s operations in recent months.
“The positive outlook is based on our expectation for increasing cash flow that will result from successful completion of its ‘Market/Access’ and ’08/09′ projects,” S&P said.
The MarketAccess Project involves the pipeline working in conjunction with Consolidated Edison Co. of New York Inc. (ConEd), the Algonquin Gas Transmission System LLC and the Millennium Gas Transmission System to transport an additional 100 MMcf/d to New York City. Together with a related application filed by Empire Pipeline, the overall project has been dubbed the Northeast-07 Project, according to Iroquois.
Iroquois also is proposing to expand its existing system to receive an additional 200 MMcf/d at Iroquois’ interconnect with Algonquin in Brookfield, CT, and deliver these contracted volumes to the KeySpan system at South Commack, Long Island. The 08/09 Expansion Project involves the construction of three sections of new 36-inch diameter buried pipeline looping and associated above-ground facilities along Iroquois’ existing mainline in New York and Connecticut, a new compressor station in Milford, CT, and additional compression at Iroquois’ recently certificated compressor station to be constructed in Brookfield, CT. The project would be constructed in three phases to accommodate facility in-service dates as requested by customers.
“Higher ratings would require successful management of near-term debt maturities, and the continuation of the company’s current dividend policies,” S&P said. “The outlook could be revised to ‘stable’ if cash flows from the capital projects [Market/Access and 08/09] are below expectations, which we don’t expect at this point.
“Longer-term risks to the rating and outlook could result from deterioration in the projects’ shipper base over time, or substantial increases in debt.”
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