S&P affirms Valero

Standard & Poor's said it affirmed Valero LP's BBB- corporate credit rating after Valero Energy Corp. announced that its subsidiary Valero GP Holdings LP will offer 37% of its equity units in an initial public offering. Valero GP is the indirect general partner of Valero LP. The outlook is stable.

Pro forma debt to EBITDA should be between 3.5x and 4x.

S&P said its ratings on Valero LP reflect its standalone credit quality as ratings assume a further separation between Valero Energy and Valero LP over time through subsequent public equity offerings of Valero GP. The ratings also reflect Valero LP's ownership of somewhat predictable operations primarily focused in refined product pipelines, crude oil pipelines, crude oil terminals and storage and a 2,000-mile anhydrous ammonia pipeline.

The ratings are constrained by a rather aggressive financial policy, which can be attributed partly to the master limited partner structure and the acquisition of Kaneb Pipe Line Operating Partnership LP in 2005, the agency said.

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