Moody's rates Genesis notes B1

Moody's Investors Service said it assigned a B1 (LGD5, 79%) rating to Genesis Energy LP's proposed $300 million senior notes due 2023, upgraded its $350 million senior notes due 2018 to B1 (LGD5, 79%) from B2 (LGD5, 86%) and affirmed its Ba3 corporate family rating, Ba3-PD probability of default rating and SGL-3 speculative grade liquidity rating. The outlook is stable.

Genesis will use the proceeds from the notes to repay a portion of the borrowings under its revolving credit facility.

Moody's said Genesis' Ba3 rating is supported by its predominantly fee-based cash flows, an unusually high degree of asset and business line diversification for a company of its size, vertical integration among its various assets and leverage that is appropriate for the rating level.

Despite outspending cash flows and the potential increase in leverage in 2013 because of a heavy capex schedule, the agency said it expects Genesis' leverage and cash flow profile to improve in 2014 as it begins to realize the earnings potential of acquired assets.

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