Rating Action: Moody's downgrades Ruby Pipeline's notes to Ca; outlook negativeGlobal Credit Research - 22 Mar 2022New York, March 22, 2022 -- Moody's Investors Service (Moody's) downgraded Ruby Pipeline, LLC's (Ruby) Corporate Family Rating (CFR) to Ca from Caa1, Probability of Default Rating (PDR) to Ca-PD from Caa1-PD and senior unsecured notes rating to Ca from Caa1. The rating outlook remains negative."The downgrade and negative rating outlook reflect Ruby's high refinancing risk amid cash flow uncertainty and weak liquidity as its senior notes mature imminently," said Amol Joshi, Moody's Vice President and Senior Credit Officer. "The company also faces high and ongoing re-contracting risk, and the weak pricing and volume environment for such re-contracting." Downgrades: ..Issuer: Ruby Pipeline, LLC .... Probability of Default Rating, Downgraded to Ca-PD from Caa1-PD.... Corporate Family Rating, Downgraded to Ca from Caa1....Senior Unsecured Notes, Downgraded to Ca (LGD3) from Caa1 (LGD4) Outlook Actions: ..Issuer: Ruby Pipeline, LLC ....Outlook, Remains Negative RATINGS RATIONALE Ruby's Ca CFR reflects high refinancing risk given that its senior unsecured notes will mature on April 1, 2022. The credit profile is also challenged by the weak credit quality of its principal shipper Pacific Gas & Electric Company (PG&E), whose parent PG&E Corporation is rated Ba2 stable, high and ongoing re-contracting risk and the weak pricing and volume environment for such re-contracting. Ruby had been supported by natural gas pipeline transportation contracts with non-PG&E shippers having good weighted-average credit quality for about 70% of its revenue, but those matured in mid-2021. As Ruby manages its re-contracting issues, if it executes firm transportation contracts from the larger producers in the Rocky Mountains, it will likely be at significantly reduced rates as Canadian natural gas remains competitive. Ruby's owners, Kinder Morgan, Inc. (KMI, Baa2 stable) and Pembina Pipeline Corporation (unrated), have the ability to provide support, but Pembina has a preferred ownership interest relative to KMI's ownership interest. At this point, the partners' equity interests are not aligned and they do not have any contractual commitment to provide future financial support to Ruby.Ruby has weak liquidity. Because it's a relatively new pipeline, maintenance capital expenditures are minimal. Ruby does not have a revolving credit facility. The company has a subordinated debt facility provided by subsidiaries of the partners that has about $234 million outstanding and matures in 2026. The company also has $475 million of senior unsecured notes with final maturity on April 1, 2022. Ruby has a financial covenant of debt to EBITDA less than 5.5x under the senior unsecured notes, with likely non-compliance in 2022.Ruby's senior unsecured notes are rated Ca, consistent with the Ca CFR, despite its senior claim to the subordinated debt (unrated) from the partners in the capital structure. The Ca rating for the senior unsecured notes is more appropriate than the rating suggested by Moody's Loss Given Default for Speculative-Grade Companies methodology, because of the proximity of a potential default and the subordinated debt effectively being considered as a preferred equity instrument for notching purposes.The negative rating outlook reflects Ruby's significant ongoing cash flow uncertainty and weak liquidity while its senior unsecured notes imminently mature.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSRuby's ratings could be downgraded if the company is unable to refinance its debt in a timely manner, there is a significant change to its contract terms with PG&E, contracting with non-PG&E shippers fails to sufficiently materialize, or if liquidity weakens further.Ruby's ratings could be upgraded if the company achieves adequate liquidity upon refinancing its maturing debt, while contract counterparty risk as well as tenor improve.The principal methodology used in these ratings was Natural Gas Pipelines published in July 2018 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1113727. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.Ruby Pipeline, LLC (Ruby) is owned equally by Kinder Morgan, Inc. (Baa2 stable), one of the largest midstream energy companies in North America, and Pembina Pipeline Corporation (unrated), a diversified energy infrastructure company based in Calgary, Alberta. A subsidiary of Kinder Morgan, Inc. operates the company's sole asset, the Ruby Pipeline, a 1,500 MMcf per day natural gas pipeline that entered service in July 2011 and runs 680 miles from Opal, Wyoming to Malin, Oregon.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. 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Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Amol Joshi, CFA VP - Senior Credit Officer Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. 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