Moody's rates Southern Star notes Ba1

Moody's Investors Service said it assigned a Ba1 rating to Southern Star Central Corp.'s $450 million of new senior notes due 2022, affirmed its existing senior notes at Ba1, affirmed subsidiary Southern Star Central Gas Pipeline, Inc.'s senior bonds at Baa3 and changed the outlook for the companies to positive from stable.

Southern Star will issue $450 million of new notes due 2022 and use the proceeds to repay the $250 million of its existing notes due 2016 and $110 million of borrowings expected to be outstanding under its revolver when the transaction closes. Concurrently, Southern Star Central Gas will incur a $100 million term loan due 2016 and repay a $4 million capital lease. Southern Star will distribute $160 million of the proceeds to its parent, MSIP-SSCC Holdings, LLC, which is owned by Morgan Stanley Infrastructure Partners.

"Southern Star's recapitalization will result in incremental debt, but we see an overall improvement to the credit profile from ongoing organic growth and a recent rate increase," Moody's senior vice president Mihoko Manabe said in an agency news release.

The positive outlook signals a potential for an upgrade over the next 12 to 18 months.

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