S&P lifts Gibson view to positive

S&P said it revised the outlook on Gibson Energy ULC to positive from stable.

The agency also said it affirmed the company's BB long-term corporate credit and senior unsecured debt ratings.

The 3 recovery rating on the notes is unchanged, indicating 50% to 70% expected default recovery.

The outlook revision follows news that Gibson it is divesting of several non-core businesses and will use the proceeds to fund growth in the infrastructure and terminals business, S&P said.

This announcement also follows steps management has taken since 2016, including the sale of the company's industrial propane business and the third-quarter 2017 announcement to divest of the U.S. environmental services business, the agency explained.

These announced divestitures and infrastructure business growth will be credit positive because they reduce volatile commodity cash flows and increase stable cash flows, S&P said.

The positive outlook also reflects a view that Gibson will continue to expand the more stable infrastructure business segment and increase stable take-or-pay and fee-based cash flows to 80% to 85% as it secures more contracts and expands this business, the agency said.

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