Moody's eyes Targa for upgrade

Moody's Investors Service said it placed under review for upgrade the ratings of Targa Resources Corp., including its Ba1 corporate family rating and Ba3 secured bank facility rating, and Targa Resources Partners LP's Ba1 senior unsecured notes rating.

The decision to review follows Targa's agreement to sell its 25% equity interest in Gulf Coast Express Pipeline for $857 million. Targa anticipates getting the full proceeds in the second quarter of 2022. The SGL-2 speculative grade liquidity rating is unchanged. The agency changed the outlook to under review from stable for both Targa and TRP.

“This rating action reflects the above positive developments, which by strengthening Targa's financial profile will bolster its capacity to withstand negative credit impacts from carbon transition risks. While financial performance of Targa will continue to be influenced by industry cycles, compared to historical experience Moody's expects future profitability and cash flow in this sector to be less robust at the cycle peak and worse at the cycle trough because global initiatives to limit adverse impacts of climate change will constrain the use of hydrocarbons and accelerate the shift to less environmentally damaging energy sources,” Moody’s said in a press release.

The review will focus on Targa's financial policies, planned corporate and capital structure simplification, and the nature of the cross-guarantees expected to be in place between Targa and TRP, Moody’s said.

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