Moody's eyes MountainWest for downgrade

Moody's Investors Service said it placed the senior unsecured rating of MountainWest Pipeline Holding Co. under review for downgrade.

The review follows Thursday’s announcement that the pipeline would be sold by Southwest Gas Holdings, Inc. Williams Cos., Inc. for $1.5 billion in an all-cash transaction, including $430 million of assumed debt. The acquisition price represents about an 8x estimated 2023 equity multiple.

“Although we view Williams as a strong owner for Mountain West, the ratings of the company's two existing wholly-owned pipelines are restrained to one notch above Williams' rating, reflecting Williams' dependence on the pipelines' cash flow to support its own debt service requirements and dividends. The review will focus on the integration of MountainWest into the Williams organization, the reliance of Williams on distributions from MountainWest, and any other changes in the management and financial policy of the pipeline after the acquisition,” Moody’s said in a press release.

The transaction is expected to close early next year, subject to Hart-Scott-Rodino Act approval and other customary closing conditions.

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