Fitch Affirms Kinder Morgan, Inc.; Outlook Remains Negative.

NEW YORK -- Fitch affirms Kinder Morgan, Inc.'s (KMI) outstanding debt securities as follows:

-- Issuer Default Rating (IDR) 'BBB';

-- Notes, debentures, and debt shelf registration 'BBB';

-- Capital trust securities (issued by KN Capital Trust) 'BBB-';

-- Short-term commercial paper 'F2'.

The Rating Outlook is Negative. The Outlook was revised to Negative from Positive in August 2005, following KMI's announcement that it had agreed to acquire Terasen Inc., a Canadian based pipeline and utility company. The transaction closed in November 2005 with the cash portion of the purchase financed with $2.15 billion senior unsecured debt obligations of KMI issued through a Canadian subsidiary of KMI.

The Negative Outlook status primarily reflects the significantly higher consolidated debt leverage at KMI following the acquisition and the long-term uncertainty associated with an aggressive internal growth strategy. It is likely that debt levels at KMI will not decrease significantly over that next several years given substantial anticipated spending to fund expansion projects, particularly in Canada and an increasing common dividend payout. As a result, credit measures at KMI both on a standalone and consolidated basis with KMP, will be weak for the rating category over the near term. Long-term strengthening in credit ratios will primarily result from increased contributions from expansion projects and distributions from affiliate Kinder Morgan Energy Partners, L.P. (KMP); senior unsecured debt 'BBB+', Rating Outlook Stable, by Fitch. Credit measures could also be negatively affected in a rising interest rate environment given the high utilization of floating rate debt at both KMI and KMP.

KMI has identified several expansion projects relating to its Canadian-based Trans Mountain and Corridor pipelines that could require upwards of $1.5 billion to $2.5 billion in funding by 2010. Mitigating expansion risk are favorable North American oil supply/demand fundamentals and expected strong shipper support. KMI's Canadian assets are particularly well positioned to benefit from increasing development of oil reserves in the Alberta oilsands. Other favorable rating considerations include the anticipated strong cash flow to be generated by KMI's assets including its KMP ownership interest, the predictability in performance from Terasen's regulated operations, the benefits of increased scale and diversity of operations, and KMI's record as an operator of energy/utility assets.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.