NEW YORK--(BUSINESS WIRE)--Widening credit default swap (CDS) spreads for Kinder Morgan Energy Partners LP are indicating much pricier credit protection for the oil & gas company, according to Fitch Solutions in its latest CDS case study snapshot.
Five-year CDS on Kinder Morgan widened out 28% over the past week and nearly 400% since the start of 2015. Kinder Morgan's CDS are now at their widest level in seven years. After pricing consistently at 'BBB/BBB-' levels for much of the past year, credit protection on Kinder Morgan's debt is now pricing in 'B+' territory.
'Market scrutiny is attributed to Kinder Morgan's heavy debt burden, constricted capital market access, and concerns over profitability amid continued weakness in the oil and gas industry,' said Director Diana Allmendinger. 'Time will tell if market sentiment changes for Kinder Morgan following their announcement earlier this week of a 30% acquisition in Natural Gas Pipeline Company of America.'
Fitch Solutions case studies build on data from its CDS Pricing Service and proprietary quantitative models, including CDS Implied Ratings. These credit risk indicators are designed to provide real-time, market-based views of creditworthiness. As such, they can and often do reflect more short term market views on factors such as currencies, seasonal market effects and short-term technical influences. This is in contrast to Fitch Ratings' Issuer Default Ratings (IDRs), which are based on forward-looking fundamental credit analysis over an extended period of time.
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