Moody’s gives Targa notes Ba3

Moody’s Investors Service said it assigned a Ba3 rating to Targa Resources Partners LP’s proposed senior notes due 2031. TRP is wholly owned by Targa Resources Corp.

“TRP’s proposed and existing senior notes are unsecured and the creditors have a subordinated claim to TRP’s assets behind the senior secured revolving credit facility and the accounts receivable securitization facility. The Ba3 rating on TRP’s unsecured notes, one notch lower than Targa’s Ba2 corporate family rating (CFR), reflects the substantial amount of priority claim secured debt in the capital structure as well as the likelihood of increased revolver usage. Accordingly, we believe the Ba3 rating is more appropriate than that suggested by the Moody’s loss given default (LGD) methodology,” the agency said in a press release.

The proceeds are expected to be used to fund a tender for TRP’s $580 million of senior notes due 2024 and to reduce borrowings under TRP’s revolving credit facility; and therefore, the transaction will be debt neutral.

The outlook is stable.

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