Moody's rates Rose Rock notes B1

Moody's Investors Service said it assigned a Ba3 corporate family rating, a Ba3-PD probability of default rating and an SGL-3 speculative grade liquidity rating to Rose Rock Midstream, LP and a B1 (LGD5, 75%) rating to the $350 million of senior notes due 2022 to be issued by the company and Rose Rock Finance Corp. The outlook is stable.

Rose Rock has acquired from SemGroup Corp. the remaining one-third interest in SemCrude Pipeline, LLC, which owns a 51% interest in White Cliffs Pipeline LLC, for $300 million. Rose Rock also closed the transaction to acquire crude oil trucking assets from a subsidiary of Chesapeake Energy Corp. Both transactions were funded with borrowings under Rose Rock's $585 million senior secured revolving credit facility.

The proceeds of the notes will be used to repay outstanding borrowings on the revolver and for general partnership purposes.

The agency said Rose Rock's Ba3 corporate family rating is reflective of its predominantly fee-based services and fixed-margin transactions within strong growth areas that mitigate commodity price volatility and provide for stable, visible cash flow growth potential. The rating also incorporates the strategic nature of its assets, its relationship with SemGroup and the credit strength of its top customers.

The rating is constrained by Rose Rock's small size, scale and the risks inherent in the business model for growth-oriented master limited partnerships, Moody’s said.

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