Our 'BBB' rating on Southern Natural Gas Co. (SNG) is derived from: Our anchor of 'bbb+', based on our "strong" business risk and 'intermediate' financial risk profile assessments for the company. One notch lower than the stand-alone credit profile, given SNG is a wholly owned subsidiary of El Paso Pipeline Partners L.P. (EPB; 'BBB') and does not have any ring-fencing provisions. The modifiers do not affect SNG's ratings. Seven-year average contract life with an investment-grade shipper profile Sizable storage capacity provides a competitive advantage Growing power demand, and thus natural gas use, in the southeastern U.S. Stable cash flow, with about 95% of revenue coming from firm reservation charges Weak natural gas prices could pressure recontracting rates and cash flows
