S&P lifts Exterran notes

Standard & Poor's said it assigned Exterran Holdings Inc.'s proposed senior notes a BB rating and a recovery rating of 3.

S&P also upgraded the company's existing senior secured debt rating to BBB- from BB+ and revised the recovery rating on the debt to 1 from 2. S&P also downgraded Exterran's unsecured 4.25% convertible notes due 2014 rating to B+ from BB and revised the recovery rating to 6 from 4.

The outlook is stable.

Exterran will use proceeds from the new notes to repay the $300 million outstanding under its asset-backed securitization facility and to pay down borrowings under its revolving credit facility.

The ratings reflect the company's leveraged financial risk profile, the master limited partnership structure of Exterran's growing subsidiary, Exterran Partners LP, the contract compression business' relative stability, the company's exposure to production versus exploration, its large share of the domestic contract compression market, and its business and geographic diversity, S&P said.

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