S&P rates Ferrellgas notes B+

Standard & Poor’s said it affirmed the B+ rating and B- senior unsecured ratings on Ferrellgas Partners LP.

The 6 recovery rating is unchanged, indicating 0 to 10% expected default recovery.

S&P also said it affirmed the B+ rating and senior unsecured debt ratings on operating subsidiary Ferrellgas LP.

The 4 recovery rating on Ferrellgas LP’s senior unsecured debt is unchanged. The 4 rating indicates 30% to 50% expected default recovery.

S&P also said it assigned a B+ rating and 4 recovery rating to Ferrellgas LP’s $400 million proposed senior unsecured notes due 2023. The co-issuer on the notes is Ferrellgas Finance Corp.

The company recently announced plans to acquire Bridger Logistics for about $840 million. Ferrellgas will pay about $560 million in cash as part of the transaction, along with the new debt, the agency said.

The acquisition is neutral for credit quality, S&P said, because the increased cash flow diversification the acquisitions provide is partly offset by high leverage and integration risk.

The deal adds diversification to Ferrellgas’ EBITDA mix by growing the midstream segment from less than 5% of cash flow to about 25%, the agency added.

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