S&P lowers Third Coast Midstream

S&P said it lowered Third Coast Midstream LLC’s issuer rating to B- from B. The agency affirmed the B issue-level rating on the senior unsecured notes but revised the recovery rating to 2 from 3. The 2 recovery rating on the company's senior unsecured debt indicates S&P’s expectation for substantial (70%-90%; rounded estimate: 70%) recovery in the event of default.

“We believe Third Coast faces several refinancing hurdles over the next 18 months despite the significant reduction in debt. The rating action reflects our view of near-term refinancing risks and constrained liquidity in light of the approaching revolver expiry in December 2020. Even if the company extends the revolving credit facility maturity, the rating is constrained by the refinancing risks associated with the $425 million of senior unsecured notes due in December 2021,” S&P said in a press release.

The ratings remain on CreditWatch with negative implications, S&P said.

S&P said it anticipates Third Coast will continue to sell off non-core assets to help repay the revolver balance.

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