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Fitch downgrades Sunoco Logistics, debt
Fitch Ratings said it downgraded the long-term issuer default rating of Sunoco Logistics Partners LP and its operating partnership, Sunoco Logistics Partners Operations LP to BBB- from BBB.
Sunoco’s senior unsecured rating was also downgraded one notch to BBB-.
At the same time, the agency affirmed the long-term issuer default rating and senior unsecured ratings for Energy Transfer Partners, LP at BBB-.
Fitch also affirmed Regency Energy Partners, LP’s senior unsecured rating at BBB-, along with Panhandle Eastern Pipe Line Co.’s long-term issuer default rating and senior unsecured rating at BBB- and junior subordinated notes at BB.
The outlooks for all entities are stable. The agency removed Sunoco from Rating Watch Negative.
Fitch said the action follows the announcement that Energy Transfer Partners unitholders voted to approve the merger with Sunoco. The transaction is expected to close on April 28 and, upon closing, Sunoco will change its name to Energy Transfer Partners, LP and on May 1 is expected to begin to trade under the ticker "ETP."
Energy Transfer Equity LP (BB/stable), the general partner and sponsor of the merged entity, will also have a somewhat simplified organizational structure.
“Management believes that the combination will allow for more efficient capitalization of commercial synergies and for cost reductions across the two partnerships. Fitch generally agrees that the combination will benefit from its significant size and scale and should be able to operate assets as a single platform, which will allow for at least some of the expected cost and operational synergies,” the agency said in a news release.
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