Moody’s cuts Targa, notes, preferreds, loan

Moody's Investors Service said it downgraded Targa Resources Partners LP's (TRP) corporate family rating to Ba2 from Ba1, senior unsecured notes to Ba3 from Ba2 and preferred units to B1 from Ba3.

In a related action, the agency concluded rating review on Targa Resources Corp. (TRC) and upgraded its corporate family rating to Ba2 from Ba3. TRC's senior secured credit facility rating was downgraded to B1 from Ba3 while its SGL-3 speculative grade liquidity rating was affirmed.

The outlook was changed to negative. The review was initiated on Nov. 3 when TRC announced agreement to purchase all of the outstanding common units of TRP.

TRP's corporate family rating, probability of default rating and SGL-3 liquidity rating will be withdrawn shortly to reflect the completed reorganization. Going forward the corporate family rating, corporate family rating and SGL ratings will solely reside at TRC.

"Although the acquisition of Partners by Targa Resources Corp. simplifies the corporate structure and potentially reduces the combined company's cost of capital over the long term, the weak commodity price environment will reduce earnings and keep financial leverage higher than previously anticipated despite the recent preferred stock issuance," Moody's senior analyst Arvinder Saluja said in a news release.

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