S&P affirms Alon USA, ups notes to BB-

Standard & Poor’s said it affirmed its B+ corporate credit rating on variable master limited partnership Alon USA Partners LP.

S&P said the ratings affirmation reflects the partnership’s improved credit measures. The outlook is stable.

S&P also raised the issue-level rating on the partnership’s senior secured notes to BB- from B+. The 2 recovery rating is unchanged, indicating an expectation of substantial (70% to 90%) recovery if a payment default occurs.

At the same time, S&P withdrew the B+ issue-level rating and 3 recovery rating on the partnership’s proposed senior unsecured notes due 2022.

“The stable rating outlook on Alon reflects our expectation that the partnership will generate refining margins of about $15 per barrel over the next 12 months, resulting in adjusted debt to EBITDA of about 1.5x while maintaining adequate liquidity,” said S&P’s Mike Llanos in a news release. “If the partnership pursues the acquisition of Krotz Springs, we would likely affirm the rating.”

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