Traverse Midstream Partners LLC Assigned #B+# Rating, Outlook Term Loan Rated #B+#

Stocks and Financial Services Press Releases Tuesday September 12, 2017 09:11
NEW YORK--12 Sep--S&P Global Ratings

NEW YORK (S&P Global Ratings) Sept. 11, 2017--S&P Global Ratings said today it assigned its 'B+' corporate credit rating to Traverse Midstream Partners LLC. At the same time, we assigned our 'B+' issue-level rating and 3' recovery rating to the company's $1.135 billion senior secured term loan due 2024. The '3' recovery rating indicates our view that lenders can expect meaningful (50% to 70%; rounded estimate: 60%) recovery if a payment default occurs. The outlook is stable.

The 'B+' corporate credit rating reflects the differentiated credit quality between Traverse and that of Rover Pipeline LLC and Ohio River System LLC, the entities in which Traverse owns a 35% and 25% ownership, respectively. There are no other substantive assets at Traverse. The differential reflects the structural subordination of Traverse's debt relative to Rover and Ohio River's underlying cash flows, cash flow stability, Traverse's level of influence on corporate governance and financial policy, financial ratios at Traverse, and Traverse's ability to liquidate its investments in both entities to repay debt. We view the underlying cash flows at Rover and Ohio River to be stable because they are highly contracted with either take-or-pay agreements or minimum volume commitments. Offsetting this is the low interest coverage at Traverse which limits the rating to 'B+'.

The stable outlook reflects our expectation of predictable growth of distributions from both Rover and Ohio River Systems from 2017 onward. We expect Traverse to have debt to EBITDA leverage above 6.5x through 2019.

We could lower the ratings if distributions from Rover deteriorated such that Traverse faced liquidity challenges. If credit quality at Rover decreased significantly, resulting in sustained leverage above 8x and interest coverage less than 1.5x, we could take negative rating action. This could occur due to construction or operational issues or a default by a large counterparty.

We do not anticipate a positive rating action at Traverse. If Rover's counterparties improve in credit quality or if interest coverage is sustained above 3x, we could raise the rating.

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