Moody's trims Tortoise

Moody's Investors Service said it downgraded Tortoise Borrower, LLC's corporate family rating to Ba3 from Ba2, and has downgraded to Ba3 from Ba2 the company's senior secured term loan due 2025. At the same time, Moody's placed the ratings under review for downgrade. The previous outlook on Tortoise Borrower was stable.

The downgrade follows the sharp decline in the company's asset under management over the last few weeks. Tortoise's AUM base, which is heavily concentrated in the midstream energy asset class, has been significantly affected by the extreme volatility in equity prices for midstream energy companies. The AUM decline, absent any recovery in equity prices for midstream energy companies, would significantly reduce Tortoise's revenue and earnings in 2020.

Moody's said it expects Tortoise's debt/EBITDA which at year-end 2019 stood at 5x to remain elevated. The high proportion of variable costs in Tortoise's operating expense base together with material in-progress fixed cost reductions being made by the company will serve as a buffer against the AUM driven revenue declines.

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