Fitch Affirms Boardwalk Pipelines at 'BBB' & Texas Gas at 'BBB+'

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the Issuer Default Ratings (IDRs) and senior unsecured debt ratings of Boardwalk Pipelines, LP (Boardwalk) and Texas Gas Transmission, LLC (TGT) as follows:

Boardwalk Pipelines, LP

--IDR at 'BBB';

--Senior unsecured debt at 'BBB'.

Texas Gas Transmission, LLC

--IDR at 'BBB+';

--Senior unsecured debt at 'BBB+'.

The Rating Outlook is Stable.

Boardwalk is a subsidiary of Boardwalk Pipeline Partners, LP (BWP), a publicly traded master limited partnership (MLP). Loews Corporation (Loews; IDR rated 'A' with a Stable Outlook by Fitch) indirectly owns 70% of BWP including the 2% general partner interest. Boardwalk's primary assets are its two wholly owned FERC regulated pipelines, TGT and Gulf South Pipeline Company, LP (Gulf South).

Boardwalk's ratings and Stable Outlook reflect the stable and relatively predictable cash flows generated at its pipeline subsidiaries. Additionally, the ratings heavily consider the supportive corporate sponsor Boardwalk has in Loews. Loews' commitment to Boardwalk is important to ensure the continued funding of the Boardwalk's pipeline expansion projects. The total capital cost of Boardwalk's expansion projects is now estimated at $3.9 billion, of which approximately $2.1 billion has already been spent.

The remaining $1.8 billion is expected to be funded with proceeds from the drawdown of the company's revolving credit facility and from the issuance of $1 billion in equity.

Loews has committed to provide up to the full amount of the equity needs should the partnership not be able to obtain these funds under acceptable terms. Loews today announced its intent to provide $500 million of that commitment in a deal that is expected to close on Nov. 4, 2008. It is expected that Boardwalk will issue the remaining $500 million in early 2009. Due to the ongoing capital spending program consolidated credit metrics are expected to be weaker than those of similarly rated entities. However, with the equity support from Loews, Fitch expects that metrics will be back at investment grade levels quickly as these projects come on line in 2009 and 2010 and are accretive to earnings and cash flow.

TGT's ratings reflect its strong standalone credit profile and its stable market position in the highly competitive U.S. Mid-Continent corridor. The planned Fayetteville and Greenville Laterals will also give the pipeline's customers access to production from the Fayetteville Shale in Arkansas, a key unconventional gas reservoir with significant growth expectations over the next several years. The one-notch difference in ratings between Boardwalk and TGT reflects the structural subordination of Boardwalk's debt obligations to the outstanding debt of both TGT and Gulf South. Both TGT and Gulf South have relatively low debt leverage on a standalone basis. Additionally, there are no restrictions in either company's indentures limiting their ability to upstream dividends to Boardwalk.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.