S&P reviews BreitBurn, QR Energy

Standard & Poor's said it placed its ratings on BreitBurn Energy Partners LP on CreditWatch with negative implications, including its B+ corporate credit rating.

At the same time, the agency placed its ratings on QR Energy, LP, including the B corporate credit rating, on CreditWatch with positive implications, reflecting its proposed acquisition by a higher-rated entity if BreitBurn's current corporate credit rating is not lowered.

The negative CreditWatch placement follows BreitBurn's announcement that it plans to acquire QR Energy for about $3 billion, including $1.6 billion of new BreitBurn units to be issued to QR's unit holders and $1.4 billion of assumed debt.

"The negative CreditWatch reflects our view that the transaction and estimated capital spending and distribution requirements would result in a material weakening of the company's financial risk profile, while only modestly improving its business risk profile," S&P credit analyst Ben Tsocanos said in a news release.

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