The ratings on Southern Natural Gas Co. (SNG), an affiliate of El Paso Corp., are based on the credit quality of the consolidated entity. Thus, the ratings on SNG are expected to mirror those of El Paso. The ratings on El Paso continue to be pressured by continued reductions in cash flow estimates, ongoing refinancing risk, the inability to successfully meet debt-reduction goals, and a stressed liquidity position. El Paso's credit quality is a function of its core and more stable asset-based business units (regulated pipelines, exploration and production, and midstream activities), which represent about 85% of projected consolidated cash flow. However, El Paso's energy trading and marketing business has severely affected credit quality due to substantial market and credit
