Moody's rates FR BR loan B3

Moody's Investors Service said it assigned first-time ratings to FR BR Holdings, including a B3 corporate family rating, a B3-PD probability of default rating and a B3 (LGD 4) rating to its five-year term loan B facility.

The outlook is stable.

The proceeds will be used to partially fund the $1.2 billion acquisition price that the company has agreed to pay Dominion Energy, Inc. to acquire its 50% equity interest in Blue Racer Midstream, LLC, Moody's said.

The transaction is expected to close in December 2018.

The ratings reflect the underlying credit strength of Blue Racer, as well as the structural subordination of its cash flow, the agency said.

The debt rating is one notch lower than the B2 senior unsecured rating of Blue Racer because FR BR's creditors are taking equity like risk by relying on Blue Racer distributions, which is a residual payment after Blue Racer has covered its own operating expenses and debt service, Moody's explained.

The ratings also consider the company's high consolidated financial leverage, single asset concentration in the Utica and Marcellus Shale plays and structurally subordinated position to Blue Racer's cash flow, the agency said.

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