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, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee. The firm represents investors in claims against their brokerage firm throughout the country.
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