Tallgrass Energy Partners, LP #BB+# Ratings Affirmed On Structural Simp Outlook Revised To Positive

Stocks and Financial Services Press Releases Wednesday June 13, 2018 09:14
NEW YORK--13 Jun--S&P Global Ratings

NEW YORK (S&P Global Ratings) June 12, 2018--S&P Global Ratings today affirmed its 'BB+' corporate credit and issue-level ratings on Tallgrass Energy Partners LP and revised the outlook to positive from stable. The '3' recovery rating is unchanged, indicating our expectation for meaningful recovery (50% to 70%, rounded estimate: 65%) in the event of a payment default.

The rating action reflects the change in our approach in assessing the credit quality of Tallgrass following its announcement to simplify the structure. When the transaction closes Tallgrass will own 75% of REX, which now leads us to consolidate its cash flows and debt proportionately. As a result, the partnership's scale notably increases, resulting in total adjusted EBITDA of roughly $1 billion. We previously only accounted for the distributions it received from REX without burdening its leverage metrics with REX's debt. In our view, REX is a strategic asset to Tallgrass and we would expect Tallgrass to support REX if it became financially distressed. In addition, the recent announcement to convert a portion of the competing White Cliffs Pipeline system to natural gas liquids (NGL) service will reduce the oversupply of crude takeaway capacity in the DJ Basin. Paired with the recent improvement in commodity prices, both factors are a credit positive for Tallgrass's PXP, and should help mitigate recontracting risk in 2020 and beyond.

The outlook on Tallgrass is positive, reflecting our expectation of increasing EBITDA and adjusted debt leverage improving to the 4.0x to 4.5x range by 2019 following the debt repayment at REX. We assume a moderate decline in EBITDA when contracts on PXP expire.

We could raise Tallgrass' rating to 'BBB-' if PXP is able to successfully recontract its capacity while Tallgrass maintains adjusted debt leverage of about 4.5x. Additionally, an improvement in scale or diversification of its asset base could also lead to an upgrade if adjusted debt to EBITDA is below 4.5x.

We could revise the outlook to stable if leverage is sustained above 4.5x or if we expected a 25% or greater decline in EBITDA from PXP when contracts expire absent any other changes to the asset base to offset those lost cash flows.

Latest Press Release

KASIKORNBANK announces 2018 net profit of Baht 38,459 Million

Mr. Patchara Samalapa, President of KASIKORNBANK, said KASIKORNBANK announced net profit for the year of 2018 of Baht 38,459 Million, an increase of Baht 4,121 Million or 12.00% over the previous year. Operating performance for the year of 2018 compared...

Siam Commercial Bank reported 2018 net profit of Baht 40.1 billion

Siam Commercial Bank and its subsidiaries announced net profit of Baht 7.1 billion in the fourth quarter of 2018 and Baht 40.1 billion for 2018 (based on unaudited consolidated financial statements), a 7.1% yoy decrease from a year ago. Total operating...

Johnson Johnson Completes Acquisition of Ci:z Holdings Co., Ltd.

Johnson & Johnson (NYSE:JNJ) today announced the completion of the acquisition of Ci:z Holdings Co., Ltd. (TYO: 4924) (the "Company") for a total purchase price of approximately JPY / CNY230 billion. The acquisition was completed through a series of...

Siam Commercial Bank Partners with Chaixi Bameekiao and Visa To facilitate QR payment for noodle franchise

- Ms. Pimjai Tongmee, SCB's Payment Product Sales and Delivery Division Executive Vice President - Mr. Panrob Kamla, President of Chaixi Bameekiao Co. Ltd - Mr. Suripong Tantiyanon, Country Manager for Visa Thailand "Siam Commercial Bank" (SCB)...

Isotropic Systems Raises $14 Million in Series A Funding Led by Boeing HorizonX Ventures to Advance Space-Based Connectivity

- Isotropic's approach to next-generation integrated terminal creates profound change in terminal economics and performance to unlock the satellite industry's full potential Isotropic Systems Ltd., the next-generation integrated satellite terminal...

Related Topics