S&P gives McJunkin B+, loans BB, B+

Standard & Poor's said it assigned its B+ corporate credit rating to McJunkin Corp.

At the same time, the agency said it assigned a BB rating and 1 recovery rating to McJunkin's proposed $200 million asset-backed revolving credit facility and a B+ rating and 3 recovery rating to its proposed $575 million secured term loan.

The outlook is stable.

According to S&P, the ratings on McJunkin reflect the highly fragmented and competitive industry in which the company operates, cyclical end-markets, aggressive financial leverage, the risk that volatile steel prices may negatively affect profitability and relatively slow stock inventory turns.

These weaknesses are only partially offset by the company's long-term customer relations, geographic and customer diversity, a highly variable cost structure, contracts that generally allow the company to pass along price increases to the customer, low capital expenditure requirements and countercyclical cash flow from working capital, the agency noted.

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