Moody's rates Martin Midstream notes B3

Moody's Investors Service said it assigned Martin Midstream Partners LP B1 corporate family and probability-of-default ratings, a speculative grade liquidity rating of 3 and a B3 (LGD5, 78%) rating to the company's proposed $200 million guaranteed senior unsecured notes.

The outlook is stable.

Proceeds will be used to repay borrowings under the company's bank credit facility (not rated) and to terminate interest rate hedges and pay transaction fees.

Martin's B1 corporate family rating reflects the company's relatively small size and scale, material geographic exposure in the U.S. gulf coast, exposure to volume and price risk, and the inherent risks in the master limited partnership business model, according to the agency.

The B1 rating also considers the company's diversified business profile, niche market positions, high level of fee-based cash flows, its supportive general partner, relatively conservative financial leverage profile and seasoned management team, the agency noted.

Martin's pro-forma 2009 debt-to-EBITDA ratio, adjusted for operating leases, is about 3.7x.

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