Many analysts and investors are expressing concern over Kinder Morgan’s rating outlook change from stable to negative by Moody’s. Outlook ratings indicate the probability of a rating change. The designation “negative” is used for a potential downgrade.
According to 24/7 Wall St, Kinder Morgan, formally a master limited partnership (MLP), is one of the most widely followed energy- related companies in the country. Moody’s reported that Kinder’s rating outlook change affects approximately $44 billion of rated debt.
24/7 Wall St reports that Moody’s credit rating review was in part a response to Kinder Morgan’s announcement to increase ownership in Natural Gas Pipeline Company of America (NGPL) to 50% from 20%.
Of the three major credit rating agency, Moody’s was the only one to change Kinder Morgan’s rating outlook to negative. Fitch and S&P ratings appear to be unaffected by the announcement.
Moody’s report dated December 1, 2015, which announced the outlook change, affirmed Kinder Morgan’s Baa3 senior unsecured and Prime-3 commercial paper ratings.
A Baa3 rating is the lowest investment grade rating used by Moody’s. If Kinder Morgan’s rating is downgraded, their rating will be considered non-investment grade, better known as “junk”. Undoubtedly this has raised concern for many and has some investors questioning if a Kinder Morgan investment opportunity was right for them.
The White Law Group continues to investigate the liability that brokerage firms may have for recommending speculative energy-related investments like Kinder Morgan.
When brokerage firms fail to put their client’s best interest first and make unsuitable investment recommendations, they may be liable for investment losses.
For a free consultation with an securities attorney, please call the firm’s Chicago office at (312)238-9650.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida. The firm represents investors in claims against their brokerage firm throughout the country.
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