S&P cuts El Paso Corp. ratings

Standard & Poor's said it lowered its corporate credit rating on El Paso Corp. to B from B+ and the senior unsecured debt to B- from B+ as the company pursues a new long-range plan to trim its operations and repair its balance sheet.

The outlook remains negative.

S&P said the long-range plan released by El Paso has many credit-friendly elements, but considerable risks remain as the company tries to execute the plan. If the company is successful, S&P said it could provide a foundation for stabilizing and eventually improving El Paso's credit profile.

The heightened risks during the transition period necessitate a lower credit rating and a continuation of the negative outlook, until some progress on the plan is accomplished, the agency said.

El Paso plans to exit several business lines over the next three years that will leave the company focused on two primary business activities by 2006: natural gas pipelines and exploration and production with an emphasis on natural gas production.

A scaled-back marketing and trading operation, some international power operations, and a smaller interest in oil and gas midstream operator GulfTerra Energy Partners LP (BB+/watch negative/--) will constitute the remainder of El Paso.

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