TEXT-Moody's release on Inergy LP

(The following statement was released by the rating agency)

Approximately $775 million of rated debt securities affected

April 24 - Moody's Investors Service affirmed Inergy, L.P.'s NRGY.O (NRGY) ratings and left the outlook positive in conjunction with the company's proposed $150 million add-on notes offering.

Moody's is assigning a B1 (LGD 4, 68%) rating to the company's add-on notes offering while simultaneously affirming the company's Ba3 corporate family (CFR), Ba3 probability of default rating (PDR), the B1 and LGD 4 (the point estimate is moving from 67% to 68%) ratings on the existing senior unsecured notes, and its SGL-3 speculative grade liquidity ratings.

Moody's does not rate the company's $425 million senior secured revolving credit facilities ($350 million acquisition facility and $75 million working capital facility) or the company's general partner Inergy Holdings L.P. (NRGP). The positive outlook reflects Inergy's ongoing diversification strategy into the midstream arena which provides the company with growth of its more durable fee-based earnings and cash flows while helping to somewhat offset the seasonality and declining organic volumes due to rising customer conservation that affect its propane cash flows.

With the recently acquired Arlington Storage Corporation, LLC (ASC), and the future development of the Thomas Corner natural gas storage facility, Inergy is poised to become one the largest natural gas storage operators in the Northeast.

When combined with the completion of the West Coast project, about 30% to 40% of NRGY's consolidated EBITDA is expected to be generated from the more stable midstream segment.

The positive outlook also assumes the company will continue on its path of improving its financial profile. While leverage has (adjusted debt/EBITDA) increased to approximately 4.1x from 3.5x, it is still within the range acceptable at the current ratings level and in Moody's view, still has the momentum to improve over the next 12 to 18 months.

The increase in the current leverage is partially driven by the large upfront capital spending needed to complete NRGY's West Coast and Northwest lateral projects.