S&P assigns Magellan Midstream loan BB-

Standard & Poor's said it assigned its BB- rating and 4 recovery rating to Magellan Midstream Holdings LP's (MMH) $275 million term loan due 2012 and affirmed its BBB corporate credit rating on Magellan Midstream Partners LP (Magellan).

Proceeds from the new offering will be used to repay the existing $96 million debt balance, fund a defeasance account and distribute about $152 million to the sponsors.

The ratings on Magellan reflect assets that generate relatively stable, consistent free cash flow, modest organic growth opportunities and volume-based fees and tariffs, which insulate the company from commodity price risk, the agency said.

These positives are offset by expectations of continued acquisitions, S&P noted.

The ratings on Magellan also reflect the company's status as a master limited partnership and the requirement that the partnership distribute most of its cash flow, the agency said.

The ratings on MMH's new term loan reflect a more aggressive recapitalization compared with the $250 million recapitalization in December 2004, S&P said.

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