Fitch Ratings has affirmed its ratings for Energy Transfer Equity, LP (ETE) and Energy Transfer Partners, LP (ETP) with a Stable Outlook. Fitch has also placed it ratings for Regency Energy Partners, LP (RGP) on Rating Watch Positive following the announcement that ETP is proposing to acquire RGP in a unit-for-unit transaction valued at roughly $18 billion including the assumption RGP debt. In association with the proposed transaction ETP will assume all of RGP's outstanding senior debt and refinance any RGP revolver borrowings. ETE has agreed to provide a 5-year, incentive distribution rights subsidy of $320 million in support of the transaction. The proposal has been reviewed and accepted by the Boards of Directors and Conflicts Committees of both ETP and RGP, and is expected to close in the second quarter of 2015 subject to Hart-Scott-Rodino approval and an ETP and RGP unitholder vote.

The affirmation of ETP with a Stable Outlook is reflective of FItch's belief that the transaction provides ETP with significant benefits including increased size and scale, a robust platform for growth, increased geographic exposure to the Marcellus and Utica shale in particular, and the opportunity for a fair amount of what should be easily achievable synergies. For ETE the affirmation recognizes that ETE's consolidated credit profile does not materially change as a result of the merger but by consolidating RGP into ETP (a lower cost of capital entity) cash flows up to ETE should improve, driven by expected synergies and improved returns on growth projects previously planned at RGP. Additionally, ETE should benefit somewhat from a simplification of its organizational structure and slightly improved credit profile of its subsidiaries though it remains structurally subordinate to a significant amount of subsidiary debt.

Fitch expects no material impact to leverage at ETP as a result of the transaction. Prior to the transaction Fitch's expectations for leverage at ETP for 2015 and 2016 was a range of 4.0x to 4.5x, and ETE leverage (non-consolidated) of between 3.0x and 4.0x. Both companies, pro forma for the transaction, are expected by Fitch to remain within these ranges through 2015 - 2016.

For RGP the Positive Watch reflects that in being acquired and with its debt assumed by its higher rated affiliate, RGP's notes at closing should be rated at ETP's rating. Fitch would expect to resolve the Rating Watch at or near closing following Federal and unit-holder approvals.

RATING SENSITIVITIES:

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

ETP

--A material improvement in credit metrics with ETP adjusted leverage sustained at between 3.5x and 4.0x;

--A lessening of consolidated company business risk as ETP acquires and expands fixed-fee operations.

ETE

--Parent company debt-to-EBITDA maintained below 1.5x;

--Improving credit profile and ratings at subsidiaries.

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

ETP

--Weakening credit metrics with ETP adjusted leverage above 5.0x;

--Increasing commodity exposure.

ETE

--Increasing parent company leverage above 4.5x;

--Weakening credit profiles at ETP and RGP.

The following ratings have been affirmed by Fitch with a Stable Outlook:

Energy Transfer Equity, L.P.

-- Issuer Default Rating (IDR) at 'BB';

--Secured senior notes at BB+';

--Secured term loan at 'BB+';

--Secured revolving credit facility at 'BB+'.

Energy Transfer Partners, L.P.

-- IDR at 'BBB-';

--Senior unsecured debt at 'BBB-';

--Junior subordinated debt at 'BB'.

RGP's ratings have been placed on Rating Watch Positive. Fitch currently rates RGP as follows:

--Long-term IDR 'BB';

--Senior secured revolver 'BB+';

--Senior unsecured notes 'BB';

--Series A preferred units 'B+'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Relevant Research:

--'2015 Outlook: Natural Gas Pipelines (Stability Despite Price Uncertainty)' (December 2014);

--'Pipelines, Midstream and MLP Stats Quarterly - Third Quarter 2014' (December 2014);

--'MLP End Game (Common Goals - Divergent Strategies) (November 2014);

--'Bakken Shale Report (Prolific Production Prompts New Pipelines) (October 2014);

--'What Investors Want to Know: Pipelines, Midstream and MLPs' (October 2014);

--'Midstream Spending Significantly Rising for MLPs and C-Corps' (August 2014);

--'Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage' (May 2014)';

--'Rating Pipelines, Midstream and MLPs - Sector Credit Factors' (January 2014).

Applicable Criteria and Related Research:

Rating Pipelines, Midstream and MLPs - Sector Credit Factors

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=722082

Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749393

Midstream Spending Significantly Rising for MLPs and C-Corps

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=759467

What Investors Want to Know: Pipelines, Midstream and MLPs

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=785149

Bakken Shale Report (Prolific Oil Production Prompts New Pipelines)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=783488

MLP End Game (Common Goals -Divergent Strategies)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=802308

Pipelines, Midstream and MLP Stats Quarterly -- Third-Quarter 2014 (Third-Quarter Review)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=834968

2015 Outlook: Natural Gas Pipelines (Stability Despite Price Uncertainty)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=839208

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=978624

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Fitch RatingsPrimary AnalystPeter MolicaSenior Director+1-212-908-0288Fitch Ratings, Inc.33 Whitehall St.New York, NY 10004orKathleen ConnellyDirector+1-212-908-0290orCommittee ChairpersonMark C. Sadeghian, CFASenior Director+1-312-368-2090orMedia Relations:Alyssa Castelli, New York, +1 212-908-0540Email: alyssa.castelli@fitchratings.comElizabeth Fogerty, New York, +1 212-908-0526Email: elizabeth.fogerty@fitchratings.com