Fitch rates NuStar Logistics notes BB

Fitch Ratings said it assigned a BB rating to NuStar Logistics, LP's proposed issuance of senior unsecured notes.

The new notes are to be guaranteed by NuStar Energy LP and NuStar Pipe Line Operating Partnership, LP.

Proceeds are to be used for general partnership purposes, which include the reduction of revolver borrowings. NuStar Energy's revolver was used to pay down $230 million of notes due in March 2013 and $250 million of notes in June 2013.

Fitch said the BB rating is supported by NuStar Energy's strong base of primarily fee-based and regulated pipeline, and terminalling and storage assets. These assets accounted for 80% of segment EBITDA in 2011 and Fitch estimates the assets could account for 90%-95% of EBITDA by the end of 2013. The company sold 50% of its asphalt operations in the 2012 third quarter and closed on the sale of its San Antonio refinery in January 2013.

Both of these assets generated volatile cash flows, the agency said.

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