OREANDA-NEWS. Fitch Ratings has removed from Rating Watch Negative and affirmed the ratings for The Williams Companies, Inc. (WMB). Fitch affirmed WMB's Long-Term Issuer Default Rating (IDR) and senior unsecured ratings at 'BB+' with a Recovery Rating of 'RR4' for the senior secured debt. The Rating Outlook is Stable.

Fitch has also affirmed the ratings for Williams Partners L. P. (WPZ) with the long-term IDR and senior unsecured ratings at 'BBB-' and the short-term IDR and commercial paper (CP) rating at 'F3'.

In addition, Fitch has affirmed the senior unsecured rating for Williams Partners Finance Corporation (WPFC) at 'BBB-' and the Long-Term IDRs for WPZ's pipeline subsidiaries, Northwest Pipeline LLC (NWP), and Transcontinental Gas Pipe Line Company, LLC (Transco), at 'BBB'. The Rating Outlook for WPZ, NWP, and Transco is Stable.

A full list of rating actions follows at the end of this release. Approximately $24.8 billion of debt is affected by today's rating actions.

KEY RATING DRIVERS

Today's rating actions follow WMB's announcement that it plans to implement strategies to improve its credit profile and WPZ's. The new initiatives follow the termination of the merger between WMB and Energy Transfer Equity LP (ETE; IDR 'BB'/Outlook Stable) on June 29, 2016. WMB also announced a 69% cut in its dividend. Its quarterly dividend will be $0.20/unit, down from $0.64/unit. This will allow WMB to reinvest cash at its operating partnership, WPZ. In total, WMB plans to reinvest $1.7 billion at WPZ through the end of 2017. Canadian assets held by both WMB and WPZ are on track to be sold in the latter half of 2016 further reducing cash needs. The assets are expected to generate proceeds in excess of $1 billion with over $800 million of the total proceeds going to WPZ.

WPZ announced that its distribution will remain flat through 2017, and Fitch notes that the quarterly distribution has been held at $0.85/unit since the payout in February 2015. During the third quarter of 2016, WPZ will implement a distribution reinvestment plan (DRIP). During the same quarter, WMB will privately purchase WPZ units. It will participate in WPZ's DRIP plan in the fourth quarter and throughout 2017.

With these initiatives, Fitch expects to see WMB's debt to distributions received decrease over the next several quarters. At the end of 2015, the debt to distributions ratio was 2.6x, and Fitch expects it to fall in the range of 2.1x-2.3x at the end of 2017.

WPZ's credit profile is also expected to be improved over the next several quarters. Fitch expects adjusted leverage to improve from 4.8x at the end of 2015 to a range of 4.5x-4.8x by the end of 2016 and to a range of 4.3x to 4.6x by the end of 2017. WPZ's growth capex budget is largely directed toward spending at its natural gas pipeline, Transco. Growth capex at WPZ in 2016 is to be $1.9 billion and $1.3 billion of the total is at Transco. New projects at Transco will increase WPZ's fee-based revenues for the long term. Fitch remains concerned about WPZ's significant exposure to Chesapeake Energy Corp. (CHK; IDR 'B-'/ Outlook Negative). In 2015, CHK accounted for 18% of WPZ's revenues.

KEY ASSUMPTIONS

Fitch's key assumptions within the rating case for WMB and WPZ include:

--Plans to enhance the credit profile for both WMB and WPZ will be implemented and executed as management has stated;

--The timing of the asset sale closes in 2H16 and proceeds are in excess of $1 billion;

--Capex at WPZ will largely focus on growth projects at its pipeline operating subsidiary, Transco;

--Growth capex at WPZ is $1.9 billion in 2016 followed by $3.1 billion in 2017, in line with management's guidance;

--WPZ will continue to operate as a standalone MLP with sufficient liquidity.

RATING SENSITIVITIES

Positive: Future developments that may, individually or collectively, lead to a positive rating action include:

WMB

--Fitch does not expect positive rating action for WMB in the near term.

WPZ

--Fitch does not expect positive rating action for WPZ in the near term.

--Should Fitch forecast adjusted leverage to trend down to 4.5x or lower on a sustained basis, favorable rating action may occur.

Transco, NWP and WPFC

--Favorable actions would be directly linked to positive rating action at WPZ.

Negative: Future developments that may, individually or collectively, lead to a negative rating action include:

WMB

--Should standalone debt to distributions received exceed 2.75x, Fitch may take negative rating action and widen the notching between WMB and WPZ.

WPZ

--Should Fitch forecast adjusted leverage of 5.0x or higher on a sustained basis, negative rating action could occur.

--Fitch may take negative rating action if the distribution coverage ratio fell below 1.0x on a sustained basis.

--Reduced liquidity or lack of access to capital markets may also result in negative rating action.

Transco, NWP and WPFC

--Negative actions would be directly linked to WPZ.

LIQUIDITY

As of March 31, 2016, WMB had cash of $164 million on the balance sheet including $125 million of cash which is held at WPZ. WMB has approximately $465 million of availability on its $1.5 billion senior unsecured revolver which extends through 2020.

As of March 31, 2016, WPZ had $125 million of cash on the balance sheet. It also had $135 million of CP outstanding on its $3 billion CP program. After accounting for outstanding CP, letters of credit and outstanding revolver borrowings, WPZ had $2.7 billion of availability on its $3.5 billion revolver which matures in 2020. WPZ also has a $150 million short-term credit facility which expires in August 2016. Previously, this was a $1 billion facility which was reduced with the issuance of the $850 million three-year term loan in December 2015.

Near term debt maturities include $600 million due in February 2017 at WPZ and $185 million due at Northwest Pipeline in April 2017. In 2018, $1.35 billion of debt becomes due.

FULL LIST OF RATING ACTIONS

Fitch has removed from Rating Watch Negative and affirmed the following ratings:

The Williams Companies, Inc.

--Long-term IDR at 'BB+';

--Senior unsecured debt at 'BB+/RR4'.

The Outlook is Stable.

Fitch has affirmed the following ratings:

Williams Partners L. P.

--Long-term IDR at 'BBB-';

--Senior unsecured debt at 'BBB-';

--Short-term IDR and CP at 'F3'.

Williams Partners Finance Corporation

--Senior unsecured debt at 'BBB-'.

Transcontinental Gas Pipe Line Company, LLC

--Long-term IDR at 'BBB';

--Senior unsecured debt at 'BBB'.

Northwest Pipeline LLC

--Long-term IDR at 'BBB';

--Senior unsecured debt at 'BBB'.

The Outlook is Stable for Williams Partners L. P., Transcontinental Gas Pipe Line Company, LLC and Northwest Pipeline LLC.