Fitch: Southern Union Merged Into Panhandle Eastern Pipe Line

On Jan. 10, 2014, Southern Union Company (SUG; IDR 'BBB-' by Fitch) was merged into Panhandle Eastern Pipeline Company, LP (PEPL; IDR 'BBB-'), with PEPL surviving the merger. PEPL has assumed SUG's obligations under its 7.60% senior notes due 2024 (2024 notes), 8.25% senior notes due 2029 (2029 notes), and floating rate junior subordinated notes due 2066 (junior notes). There is currently outstanding approximately $82.5 million 2024 notes, $33.3 million 2029 notes, and $54.5 junior notes. The assumed senior notes will rank equally in right of payment with PEPL's existing unsecured debt.

PEPL is a subsidiary of Energy Transfer Partners, L.P. (ETP; IDR 'BBB-'). ETP provides liquidity for PEPL's operations under its $2.5 billion revolving credit facility that matures in October 2017. Fitch expects ETP to manage credit metrics at PEPL at levels to maintain its current rating.

In November 2013, ETP and Energy Transfer Equity, L.P. (ETE; IDR 'BB'), owner of ETP's general partner, announced an agreement for ETE to acquire Trunkline LNG, now at PEPL, in exchange for the redemption of 18.71 million ETP limited partnership units held by ETE. This represents an effective purchase price of approximately $1 billion. The transaction is expected to close in early February 2014. ETE also anticipates that the Lake Charles Liquefaction project, currently being developed by ETE and ETP on a 60/40 ownership basis would be contributed to Trunkline LNG at the closing of the construction and related financing arrangements which are anticipated in mid-2015. Management expects that the export facility will be project financed and its debt non-recourse to ETE.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Rating Pipelines, Midstream and MLPs-Sector Credit Factors' Jan. 13, 2014;

--'NGL Pipelines: Northeast Surplus Drives New Projects' Dec. 20, 2013;

--'2014 Outlook: Midstream Services' Dec. 10, 2013;

--'2014 Outlook: Crude Oil and Refined Products Pipelines' Dec. 9, 2013;

--'2014 Outlook: Natural Gas Pipelines' Dec. 5, 2013;

--'Credit Considerations for the GP/LP Relationship' Nov. 6, 2013;

--'Funding U.S. LNG Export Facilities' Aug. 20, 2013.

Applicable Criteria and Related Research:

Rating Pipelines, Midstream and MLPs -- Sector Credit Factors

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=722082

NGL Pipelines: Northeast Surplus Drives New Projects

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=727520

2014 Outlook: Midstream Services

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=726064

2014 Outlook: Crude Oil and Refined Products Pipelines

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=726461

2014 Outlook: Natural Gas Pipelines

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724977

Credit Considerations for the GP/LP Relationship

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=721999

Funding U.S. LNG Export Facilities (Credit Issues for MLP and Corporate Sponsors)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=716427

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Fitch Ratings, Inc.
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Ralph Pellecchia, [phone]
Senior Director
Fitch Ratings, Inc.
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