S&P cuts Ruby Pipeline

S&P said it downgraded Ruby Pipeline LLC’s issuer rating to B- from B+ and its senior unsecured notes to B from BB-, citing upcoming maturities and maturing contracts unlikely to be renewed at the current rate.

At the same time, the agency placed all of the ratings on CreditWatch with negative implications. The recovery rating of 2 is unchanged, indicating an expectation of a substantial (70%-90%; rounded estimate: 85%) recovery in default.

“The CreditWatch negative placement reflects our view that we could lower our rating on Ruby further if it fails to address its senior unsecured notes due April 2022 in the near term. Given the negative environment for recontracting, we believe that Ruby’s capital structure could become unsustainable without additional support from its owners. We also believe that Ruby’s liquidity will be constrained because the company’s upcoming maturity is large compared with its cash flow generation,” S&P said in a press release.

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