Fitch lowers DCP Midstream

Fitch Ratings said it downgraded DCP Midstream LLC’s issuer default rating and senior unsecured ratings to BB+ from BBB- following news that its owners will contribute $3 billion in equity.

The agency also said it assigned a senior secured rating of BB+ with recovery rating of RR4 to the company and downgraded DCP Midstream’s short-term issuer default rating and commercial-paper rating to B from F3.

The outlook was revised to stable from negative.

DCP Midstream Partners, LP’s long-term issuer default ratings and senior unsecured ratings were affirmed at BBB- and short-term issuer default rating at F3.

Fitch said it believes that the agreement by Spectra Energy and Phillips 66 to contribute $3 billion in cash and assets is a positive development for DCP’s credit profile.

But, the agency said it downgraded the ratings because even with strong, tangible support from its owners, DCP Midstream’s commodity price exposure, expected profitability and credit metrics will remain weak due to low commodity prices and processing margins.

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