S&P ups Martin Midstream, rates notes B

S&P said it raised Martin Midstream Partners LP’s issuer rating to B- from CCC+ and assigned a B issue and 2 recovery rating to the company’s planned $400 million in second-lien notes due 2028. The 2 recovery rating indicates significant recovery prospects (70%-90%; rounded estimate: 70%) in default.

The issuer also plans to secure a first-lien revolving credit facility to replace the current revolving credit facility due August 2023.

“We raised our rating on Martin Midstream LP to reflect the revised capital structure. MMLP's proposed capital structure will include a $200 million first-lien revolving credit facility due 2027 and $400 million second-lien notes due 2028. The revolving credit facility will step down to $175 million on June 30, 2023, and further step down to $150 million on June 30, 2024,” S&P said in a press release.

MMLP will use the proceeds of the issuance, along with cash flow generated from the sale of its remaining butane inventory, to repay its $53.8 million of 1.5 lien notes due 2024 and $291.4 million of second-lien notes due 2025. MMLP will use the rest to repay the credit facility, call premiums and fees.

The outlook is stable.

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