S&P rates NuStar preferreds B+

S&P said it assigned a B+ rating to NuStar Energy LP's $200 million perpetual preferred stock issuance.

The other ratings on NuStar, including its BB+ corporate credit rating, are unchanged.

The outlook is stable and reflects a view that the partnership will have adjusted debt-to-EBITDA of about 4.7x through 2016, maintain its distribution coverage ratio exceeding 1x and have sufficient liquidity under its revolving credit facility to fund some of its growth initiatives without accessing capital markets, which could be challenging now, S&P said.

The agency also said it could consider lowering the ratings or revising the outlook if NuStar cannot maintain a distribution coverage ratio of at least 1x and leverage of about 5x during the next 18 months.

S&P also said it could lower the rating if NuStar exhibits a more aggressive strategy in managing its portfolio of businesses such that there is a renewed focus on segments with a higher degree of business risk and more volatile cash flows.

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