Fitch rates Energy Transfer notes BB+/RR1

Fitch Ratings said it assigned Energy Transfer Equity, LP's proposed offering of senior secured notes a BB+/RR1 rating.

The notes will be secured on a first-priority basis with the loans and obligations under Energy Transfer’s revolving credit facility, term loan facility and existing senior notes, by a lien on substantially all of the company’s and certain of its subsidiaries' tangible and intangible assets.

Proceeds from the offering are expected to be used to repay a portion of the outstanding indebtedness under Energy Transfer’s term loan facility. Concurrent with this repayment, the company intends to refinance the remaining debt under its term loan facility with a new tranche of loans under the facility with a lower interest rate.

Fitch said the ratings reflect its expectation that while Energy Transfer’s deconsolidated leverage will continue to be elevated in 2017, it should improve significantly as the company’s operating subsidiary partnerships, particularly Energy Transfer Partners, LP (BBB-/stable), complete large capital spending programs, cash flows come online, and distributions up to Energy Transfer increase.

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