Moody’s rates American Midstream B2, notes Caa1

Moody's Investors Service said it assigned American Midstream Partners, LP (AMID) a B2 corporate family rating, a B2-PD probability of default rating and a Caa1 rating to its proposed senior unsecured notes due 2024.

The agency also assigned an SGL-3 speculative grade liquidity rating, reflecting adequate liquidity through 2017.

The outlook is stable.

Net proceeds from the note offering will be used to repay borrowings under American Midstream’s revolving credit facility as well as borrowings under the revolving credit facility of JP Energy Partners' (JPEP, unrated), which American Midstream announced it would acquire in October. If the merger is not completed by April 30, or if the merger agreement is terminated prior to such date, the notes will be redeemed at par plus accrued interest.

"While the JPEP acquisition will increase AMID's size and bring additional fee-based cash flows, risks remain with respect to integration, expansion of asset base and counterparties that are in poor financial health," Moody’s vice president, senior analyst RJ Cruz said in a news release.

"The rating is supported by the prudent mix of equity and debt to fund the JPEP acquisition and AMID's relatively strong distribution coverage going forward."

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