Moody's rates Holly Energy notes Ba3

Moody's Investors Service said it assigned a Ba3 rating to Holly Energy Partners, LP's planned senior unsecured notes, and upgraded its outstanding senior notes to Ba3 from B1. Moody's also affirmed HEP's Ba2 corporate family rating and Ba2-PD probability of default rating. The outlook and speculative grade liquidity rating remain stable and SGL-3, respectively.

“The upgrade of HEP's existing unsecured senior notes ratings and the assignment of Ba3 rating to the new notes reflect our expectation of lower level of revolver usage and lower proportion of secured debt in the capital structure going forward than in the past. HEP's Ba3 rating on its senior unsecured notes reflects their subordination to its $1.2 billion senior secured credit facility. Because of the size of the priority claim and junior position of the senior unsecured notes in the capital structure relative to the senior secured credit facility, Moody's rates the notes one notch below the Ba2 CFR,” the agency said in a press release.

The proceeds are expected to be used to partially repay revolver borrowings. Revolver borrowings increased in March to fund the cash portion of HEP's acquisition of Sinclair Transportation Co. HEP funded the transaction with an equity issuance of 21 million LP units and $321.4 million of cash. The acquisition closed on March 14, and is expected to add $70 million-$80 million to HEP's annual EBITDA.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.