S&P lowers Southcross Energy

S&P said it lowered Southcross Energy Partners LP's issuer credit rating to CCC-from CCC.

The outlook is negative.

The downgrades reflect the heightened risk that Southcross Energy could be in default of its debt obligations by March 31, 2019, absent a meaningfully favorable change in the partnership's circumstances.

The partnership's more restrictive financial covenant – maximum total debt-to-EBITDA of 5x and senior secured debt-to-EBITDA of 3.5x – will be reinstated, S&P said.

Southcross had a total leverage ratio of 8.6x as of Sept. 30, the agency said.

The partnership currently has about $523 million of total debt outstanding, consisting of $83 million of senior secured revolver borrowings due in August 2019, about $16 million of unsecured notes due November 2019 and a $430 million senior secured term loan due August 2021, S&P said.

The negative outlook reflects a belief that the risk of a default, distressed exchange or other debt restructuring is highly likely by the end of the first quarter of 2019, absent significantly favorable changes in the partnership's circumstances, the agency said.

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