S&P trims Eagle Rock Energy

Standard & Poor’s said it lowered its senior unsecured debt ratings on Eagle Rock Energy Partners LP to B- from B. The recovery rating on these notes remains 4, indicating the expectation of average (30% to 50%) recovery in the event of a payment default.

S&P removed the rating from CreditWatch, where it was placed with positive implications on Dec. 23, 2013 following the announcement that Regency Energy Partners LP would acquire Eagle Rock’s midstream business and would also conduct an offer to exchange Eagle Rock’s $550 million of outstanding unsecured notes into an equivalent amount of Regency unsecured notes with the same tenor, coupon and a comparable covenant package.

Roughly 10% of the existing Eagle Rock noteholders did not elect to exchange the notes into Regency notes. Following completion of the exchange, S&P raised the rating on the exchanged unsecured debt to reflect S&P’s view of the recovery prospects incorporating the expected emergence valuation of Regency and Regency’s higher corporate credit rating.

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