S&P rates Southern Star notes BBB-

S&P said it assigned its BBB- issue-level rating to Southern Star Central Corp.’s $250 million of senior unsecured notes. The issuance is in two tranches consisting of $150 million of 3.35% notes due 2027 and $100 million of 3.59% notes due 2030.

The company will use the proceeds to repay the $250 million outstanding of its 5.125% notes due 2022. S&P will withdraw the BBB- rating on the 2022 notes after the notes have been repaid.

“The BBB- issuer credit rating and stable outlook on Southern Star are unchanged and are underpinned by our strong assessment of the company’s business risk and an assessment of its financial risk as aggressive. The stable outlook reflects our expectation that S&P Global Ratings’ adjusted funds from operations to debt will remain at about 11%-12% and debt-to-EBITDA ratio will not exceed 5.75x on a weighted-average basis over the next 18 months,” S&P said in a press release.

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