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Moody's places DTE Energy on review for downgrade after midstream asset deal

Moody's placed DTE Energy Co.'s long-term ratings, including its Baa1 senior unsecured rating, on review for a possible downgrade in light of the company's potential acquisition of a gathering system and gathering pipeline in the Haynesville Shale of Louisiana for $2.25 billion.

The deal includes a deferred payment of $400 million payable when the acquired pipeline comes in service in the second half of 2020. DTE Energy plans to finance the acquisition with debt and equity.

"DTE is adding a more risky set of assets to its portfolio and the acquisition is evidence of a higher tolerance for business risk than we had previously incorporated into our credit analysis," Moody's Vice President and Senior Analyst Jairo Chung said in a news release Oct. 22.

Under the transaction, DTE Energy subsidiary DTE Midstream would purchase the Haynesville assets from Momentum Midstream LLC and Indigo Natural Resources LLC. The assets include an existing gathering system and a 150-mile gathering pipeline under construction.

The rating agency affirmed DTE Electric Co.'s A2 (stable) rating and DTE Gas Co.'s A3 (stable) rating as they are insulated from the planned acquisition.