S&P Global Ratings upgraded Williams Cos. Inc.'s corporate credit rating by two notches, into investment grade, upon the Aug. 10 completion of its consolidation merger with master limited partnership Williams Partners LP.

S&P Global upped the consolidated Williams' rating from BB+, the highest rating in junk bond territory, to BBB. Williams executives had expected the upgrade and cited investment-grade credit as a reason for simplifying its corporate structure in the first place.

Still, S&P Global categorized Williams' outlook as negative due to the potential for high leverage ratios in the near term. "The benefits of the transaction are partly offset by [Williams'] higher consolidated financial leverage, which we expect to be in the 4.8x-5.0x range for the next several years," analysts wrote in an Aug. 10 note to clients.

Williams pursued the merger, which included a $10.49 billion share registration, after federal tax policy changes made the master limited partnership structure less attractive to sponsors. Williams Partners common units will cease trading on the New York Stock Exchange after market close Aug. 10.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found in the Sources section.