Fitch lowers DCP Midstream Partners on merger news

Fitch Ratings said it downgraded DCP Midstream Partners, LP’s long-term issuer default rating to BB+ from BBB-, senior unsecured rating to BB+ with recovery rating of RR4 from BBB- and short-term issuer default rating and commercial-paper rating to B from F3.

The agency also said it affirmed DCP Midstream LLC’s long-term issuer default rating at BB+, senior secured rating at BB+ with recovery rating of RR4, senior unsecured rating at BB+ with recovery rating of RR4 and junior subordinated notes rating at BB- with recovery rating of RR6.

Both companies have stable outlooks.

The downgrades and affirmations follow news that the companies have signed and closed a transaction to combine all of their assets and debt, which simplifies the corporate structure, Fitch explained.

The combined entity will be renamed DCP Midstream, LP, the agency said.

The downgrades reflect the loss of structural superiority by DCP Midstream Partners, Fitch said.

The ratings recognize that the transaction will simplify the DCP family structure and effectively create a single entity, which will be the largest independent producer and processor of natural gas liquids in the United States with a robust operating presence in all of the key production regions within the country, the agency said.

The size and breadth of the company’s operations allow it to offer its customers end-to-end gathering, processing, storage and transportation solutions, which gives it a competitive advantage, Fitch said.

The agency said it remains concerned about near-term volumetric risks across the company’s consolidated asset base.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.