The energy infrastructure giant’s attempts to calm investors’ fears are falling on deaf ears.
What: Kinder Morgan’s (NYSE:KMI) stock has been in an absolute free fall of late. On Friday the stock dropped as much as 14% intraday before ending down by 12.7%. That downdraft continued on Monday, with the stock dropping by nearly 10% right after the market opened. Over the past five trading, days the stock has lost a whopping 33%.
So what: Kinder Morgan’s recent issues started last Tuesday after Moody’s lowered its outlook for the company from stable to negative, warning that a downgrade of bonds could follow. The concern here is that the company’s bonds could be downgraded into junk territory given that its current credit rating of Baa3 is just one notch above junk.
This warning led to increased investor anxiety, which the company attempted to address on Friday by announcing its 2016 financial expectations. In that press release, Kinder Morgan reiterated that its distributable cash flow per share is projected to be enough to grow its 2016 dividend 6% to 10% above the 2015 level. However, the company did suggest that it is reviewing whether or not this is the best use of this cash, and instead could use it to fund its equity needs for 2016. Furthermore, the company plans to take action to maintain its investment grade rating and regain a stable outlook. Kinder Morgan plans to announce its formal plan in the coming days.