S&P rates Plains All American notes BBB-

Standard & Poor's said it assigned a BBB- rating to the proposed $600 million senior notes of Plains All American Pipeline LP and PAA Finance Corp.

The BBB- corporate credit rating remains unchanged.

The outlook is stable.

Proceeds will be used to help fund the acquisition of SG Resources Mississippi LLC (BB/stable) and to repay outstanding debt obligations and for general corporate purposes.

S&P said it based the rating on expectation that the acquisition will retire SG's debt and the partnership will finance it in a balanced manner with a combination of PAA Natural Gas Storage LP and PAA equity and PAA debt.

Pro forma financial leverage may rise modestly to about 4.4x debt to EBITDA but remains within expectations for the rating and should return to about 4.3x in 2011, according to the agency.

Ratings reflect the company's large and diverse network of pipelines and terminals that provide stable cash flow, and management's good track record of funding expansion capital projects and acquisitions in a balanced manner, the agency said.

Ratings also reflect the partnership's somewhat aggressive financial leverage, the inherent cash-flow volatility in its the supply and logistics business segment, and the master limited partnership structure, which gives incentive to Plains to pay out the vast majority of available cash flow to its unit holders each quarter, the agency noted.

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