Moody’s cuts SemGroup, Rose Rock

Moody's Investors Service said it downgraded SemGroup Corp.’s corporate family rating to B2 from B1, probability of default rating to B2-PD from B1-PD and senior unsecured notes to Caa1 from B3.

The agency affirmed the speculative grade liquidity rating SGL-3.

The outlook is negative.

At the same time, Moody's downgraded Rose Rock Midstream, LP's corporate family rating to B1 from Ba3, probability of default rating to B1-PD from Ba3-PD and senior unsecured notes to B2 from B1.

The speculative grade liquidity rating was affirmed at SGL-3.

The outlook is stable.

"The downgrades reflect management's increasingly aggressive distribution and dividend policy at the MLP and corporate levels, as well as a need to debt finance essentially all of 2016's approximately $400 million of growth capital spending on SemGroup's revolving credit facility," Moody's vice president John Thieroff said in a news release.

"Both SemGroup and Rose Rock face downward pressure on throughput volumes related to precipitous declines in upstream spending and heightened counterparty risk, while Rose Rock's White Cliffs pipeline faces intensified competition that will likely materially erode margins."

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