Moody's rates Inergy notes B1

Moody's Investors Service said it affirmed Inergy, LP's Ba3 corporate family and probability-of-default ratings and assigned a B1 rating (LGD 4, 68%) to its proposed $150 million add-on notes offering.

The outlook is positive.

Moody's said it does not rate the company's $425 million senior secured revolving credit facilities or its general partner Inergy Holdings LP.

The outlook reflects Inergy's ongoing diversification strategy into the midstream arena, which provides growth of its more durable fee-based earnings and cash flow, while helping to somewhat offset the seasonality and declining organic volume due to rising customer conservation that affect its propane cash flow, the agency said.

While the issuer's adjusted debt-to-EBITDA ratio rose to 4.1 times from 3.5 times, Moody's said it is still acceptable and can improve over the next 12 to 18 months.

The Ba3 corporate family rating is supported by the company's increased scale based on asset size, the agency noted.

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