Moody’s may lower Plains All American

Moody's Investors Service said it placed under review for downgrade Plains All American Pipeline, LP's Baa3 senior unsecured rating and the prime-3 rating.

The agency also placed on downgrade review the Baa3 senior unsecured and prime-3 ratings on Plains Midstream Canada ULC's U.S. commercial-paper program.

The downgrade review follows the company’s announced acquisition of a crude oil gathering system in the Permian Basin for a total of $1.2 billion, Moody’s said.

This acquisition will be significantly debt-funded initially, resulting in continued high leverage and a reliance on ongoing equity issuance and asset sales to reduce leverage to levels consistent with the Baa3 rating, the agency said.

The review will focus on Plains All American’s ability and willingness to reduce leverage to about 5x, Moody’s said, and the sustainability of that leverage given the weakness in its EBITDA growth and the demands on its cash flow.

With the acquisition of the Alpha Crude Connector pipeline, Moody's said it believes the company’s debt-to-EBITDA ratio will continue to be about 6x through the first quarter of 2017, a level that is not consistent with the Baa3 senior unsecured rating.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.