PRESS RELEASE: S&PBulletin: Texas Muni Gas II Rtg Unaffected By BP Downgrade

18th Jun 2010 15:53

The following is a press release from Standard & Poor's: NEW YORK (Standard & Poor's) June 18, 2010--Standard & Poor's Ratings Services said today that the June 17, 2010 downgrade on BP Corporation North America Inc. (BPNA; A/Watch Neg/A-1) does not affect the rating or outlook on Texas Municipal Gas Acquisition and Supply Corp. II's (TexGas II) series 2007A and 2007B bonds (A+/Negative). The downgrade of BP reflects our opinion of the challenges and uncertainties that BP continues to face after the Deepwater Horizon explosion in the Gulf of Mexico on April 20, 2010, and the subsea Macondo well blowout. These hurdles include the difficulties BP has had in containing the spill and the ultimate extent of the pollution, the consequences for BP of ongoing official investigations, and the implications of these investigations for the magnitude and timing of further cash payments by BP. BP is now subject to intense political pressure in the U.S., its largest market. We see these factors as fundamental issues differentiating BP from its peers. (See the research update on BP PLC published on June 17, 2010.) The rating on TexGas II is currently tied to the long-term credit rating of JPMorgan Chase & Co. (JPMC; A+/Negative/A-1). JPMC guarantees the obligations of JP Morgan Venture Energy Corp., TexGas II's gas supplier. Standard & Poor's could lower the rating on TexGas II's bonds if we lower the rating on JPMC or if one of the other counterparties in the transaction becomes the primary ratings constraint. The TexGas II bondholders rely on the commodity swap between TexGas II and BPNA to swap index-based revenues from the municipal participants to ensure sufficient funds to meet the transaction's principal and interest obligations. 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