TEXT-Moody's release on Sabine Pass LNG

(The following statement was released by the rating agency)

Approximately $ 2 Billion of Debt Securities Affected

April 21 - Moody's Investors Service placed Sabine Pass LNG, LP's (Sabine)
Ba3 rating for its senior secured notes due 2013 and 2016 under review for
possible downgrade.
"The review for downgrade takes into account Sabine's extensive relationships
with Cheniere Energy, Inc. (LNG.A: Quote, Profile, Research) (Cheniere: not rated) and the growing
negative pressures on Cheniere's financial and business prospects", said
Clifford Kim, Analyst at Moody's. "Recent developments in the LNG and capital
markets are likely to result in Cheniere confronting lower than expected cash
flow generation and dwindling liquidity over the next two years".
Moody's observes that Sabine represents most of Cheniere's consolidated cash
flows and operating assets. Additionally, Sabine has extensive contractual
relationships with Cheniere and its affiliates including the terminal use and
operations and maintenance agreements. These factors serve as strong incentives
to bring Sabine into a possible bankruptcy of Cheniere in order for Cheniere to
better control its estate. That being said, Moody's also recognizes certain
ring fencing provisions at Sabine including an independent director and
separateness requirements.
Moody's believes Cheniere could face significant pressure on its liquidity
position starting in 2009 since tightening of the capital markets appears to
have limited Cheniere's access to additional liquidity. Moody's expects
Cheniere will utilize a substantial portion of its unrestricted cash to pay for
capital expenditures, debt service, and corporate overhead in 2008. Cheniere
had unrestricted cash totaling approximately $297 million at December 31, 2007.
Additionally, Moody's expects continued high international demand for LNG and
lower than expected natural gas liquefaction coming online over the next
several years will likely lead to limited cash flow prospects for Cheniere's
merchant LNG marketing related activities.
The review for downgrade will consider Cheniere's ability to improve its
liquidity position and cash flow generation to meet expected cash uses over the
next several years. Moody's will also evaluate implications of Cheniere's
financial situation on Sabine and Sabine's ability to complete Phase 2
construction, which is scheduled to be completed toward the middle of 2009.
Sabine Pass LNG L.P. was formed in 2004 to construct, own and operate a
liquefied natural gas (LNG) receiving terminal with an aggregate regasification
capacity of 4 Bcf/d. Sabine has signed three 20-year Terminal Use Agreements
(TUA's) for 100% of its regasification capacity on a "take or pay" basis.
Sabine is 90.6%, indirectly-owned by Cheniere Energy, Inc.
(New York Ratings Team)