Moody’s puts MarkWest on upgrade review

Moody’s Investors Service said it placed MarkWest Energy Partners, LP’s ratings on review for upgrade, including its Ba2 corporate family rating, Ba2-PD probability of default rating, Ba3 senior unsecured rating and provisional Ba3 shelf rating.

The outlook is stable.

The SGL-3 liquidity rating is unchanged.

The upgrade review was prompted by news that MPLX LP will acquire MarkWest in a transaction valued at about $20 billion, including the assumption of MarkWest’s debt of about $4.2 billion, Moody’s said.

The transaction is expected to close in the third quarter of 2015.

The upgrade review is based on the potential benefit of MarkWest’s debt being supported by the stronger credit profile and greater financial flexibility of MPLX, the agency said.

The agency also said it affirmed MPLX’s Baa3 senior unsecured rating with a stable outlook.

The Baa2 rating of Marathon Petroleum Corp., MPLX’s general partner, is unaffected.

The acquisition will afford MPLX the significantly increased operating size and scale that was lacking, although Moody’s said it views MarkWest’s natural gas gathering- and processing-operations as weakening MPLX’s consolidated business risk profile.

MarkWest’s natural gas operations also may dilute the strategic and highly integrated relationship between MPLX and Marathon Petroleum, which had otherwise underpinned MPLX’s Baa3 rating, Moody’s said.

The review will focus on the pro forma capital structure of the combined company and whether the debt is guaranteed, the agency said.

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