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Fitch boosts Williams to investment grade after simplification merger with MLP

Fitch Ratings raised oil and gas transport giant Williams Cos. Inc.'s ratings into investment grade following the completion of Williams' simplification merger with its master limited partnership, Williams Partners LP.

The rating agency upgraded the company's long-term issuer default rating, or IDR, and senior unsecured rating one notch, to BBB- from BB+. Fitch also assigned a short-term IDR and a commercial paper rating of F3, as well as a positive outlook. Fitch affirmed the IDRs of pipeline subsidiaries Transcontinental Gas Pipe Line Co. LLC and Northwest Pipeline LLC at BBB with a positive outlook.

The ratings are based on Williams' "immense scale, geographical diversity of operations, and predominantly long-term, fee-based contracts," Fitch said in an Aug. 14 news release. In particular, continued growth in Williams' gathering and processing operations is expected to provide the company with flexibility to reach its financial goals, according to Fitch.

Fitch also sees Williams' leverage improving in 2018 as a result of the gathering and processing growth, partially offset by some volume risk.

S&P Global Ratings upgraded Williams on Aug. 10, the day Williams closed its $10.49 billion merger with Williams Partners. Williams executives anticipated the upgrades as one of the reasons for the simplification deal.