Fitch rates MarkWest notes BB

Fitch Ratings said it assigned a BB rating to MarkWest Energy Partners, LP's proposed $500 million issuance of senior notes due 2023. The company has a BB long-term issuer default rating, and the agency rates its senior revolving credit facility at BB+ and its senior debt at BB. The outlook is stable.

Proceeds are to be used to reduce revolver borrowings and for general partnership purposes such as funding capital expenditures and working capital requirements.

The agency said key rating factors that support the rating include a reasonably geographically diverse footprint, strategically well-positioned assets, an increasing amount of fee-based revenue sources, a layered hedging strategy and a strategy to fund growth with a combination of debt and equity.

According to Fitch, the ratings also factor in the following concerns: increased leverage; a significant percentage of non-fee-based cash flows from keep-whole and percent-of-proceeds arrangements; reliance on drilling and production activities in the E&P sector for gathering and processing volumes, which in turn are ultimately driven by volatile hydrocarbon prices; a capital expenditure program that has been growing significantly; and the use of a hedging strategy that includes proxy hedging, which can be affected by the periodic breakdown in the correlation between crude oil and natural gas liquids prices.

At the end of the second quarter of 2012, the debt-to-adjusted EBITDA ratio was 4 times.

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