Research Update: Southwest Gas Holdings And Southwest Gas Corp. Ratings Affirmed On Closing Of Questar Acquisition; Outlook Negative

Southwest Gas Holdings Inc. (SWX) recently closed on its acquisition of interstate natural gas pipeline Questar Pipeline LLC, which provides services in Utah, Wyoming, and Colorado. The company funded the $1.6 billion acquisition with the proceeds from a 364-day term loan that it intends to pay off with the proceeds from a future equity issuance in the $900 million-$1 billion range, as well as the proceeds from incremental long-term debt of between $600 million-$700 million at SWX. We affirmed all of our ratings on SWX and Southwest Gas Corp. (SWG), including our 'BBB-' issuer credit rating on SWX, our 'BBB' issuer credit rating on SWG, and our 'BBB' issue-level rating on SWG's senior unsecured debt. Our rating outlook on SWX

...- Southwest Gas Holdings Inc. (SWX) recently closed on its acquisition of interstate natural gas pipeline Questar Pipeline LLC, which provides services in Utah, Wyoming, and Colorado. - The company funded the $1.6 billion acquisition with the proceeds from a 364-day term loan that it intends to pay off with the proceeds from a future equity issuance in the $900 million-$1 billion range, as well as the proceeds from incremental long-term debt of between $600 million-$700 million at SWX. - We affirmed all of our ratings on SWX and Southwest Gas Corp. (SWG), including our '###-' issuer credit rating on SWX, our '###' issuer credit rating on SWG, and our '###' issue-level rating on SWG's senior unsecured debt. Our rating outlook on SWX and SWG is negative. - The negative outlook incorporates the company's decision to fund the initial transaction with short-term debt and the execution risk associated with its future equity issuance. If its ultimate funding mix incorporates a lower level of equity...

Research Update