Fitch puts DCP Midstream on watch

Fitch Ratings said it placed DCP Midstream, LP and DCP Midstream Operating, LPs' long-term (lt) issuer default rating of BB+, senior unsecured ratings of BB+/RR4 and junior subordinated notes and preferred equity ratings of BB-/RR6 on rating watch negative.

“The rating watch mainly reflects the concern that DCP will operate with leverage closer to the negative rating sensitivity of 5.5x beyond 2020 given the entities' direct exposure to commodity prices and volumetric risk,” said Fitch in a press release.

“Fitch forecasts DCP to pose weaker results in 2020 and 2021 driven by its unhedged gross margin under Fitch's updated price deck,” the agency said.

Fitch said it plans to resolve the watch after monitoring DCP's operational performance and financial policy for the next two quarters.

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