S&P trims Western Midstream

S&P said it trimmed Western Midstream Operating LP and its senior unsecured debt ratings to BB from BB+. The recovery rating on the debt remains 3.

The agency also removed the rating from CreditWatch with negative implications where it was placed on March 26. S&P assigned a negative outlook.

The downgrade follows S&P cutting Western’s primary counterparty Occidental Petroleum to BB- from BB+, the agency said.

“OXY's creditworthiness will continue to be an important factor for the rating on Western, but we now think Western can be rated one notch higher under certain conditions. Historically, the rating on OXY constrained the rating on Western because the companies were in the same corporate group. However, we think continued financial outperformance at Western, the partnership's integration with OXY's business that limits downside volumetric risk, the meaningful third party customers, and the fact we now consider them separate entities allows us to rate Western one notch higher than OXY,” S&P said in a press release.

The outlook reflects OXY’s negative outlook, the agency said.

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