S&P assigns Suburban Propane notes BB-

S&P said it gave Suburban Propane Partners LP’s planned $650 million of senior unsecured notes due 2031 BB- with 3 recovery ratings. The recovery rating indicates an expectation for meaningful (50%-70%; rounded estimate: 50%) recovery in default.

Concurrently, the agency affirmed its BB- issuer credit rating on Suburban and the BB- issue-level rating on its senior unsecured notes due 2027. S&P revised the recovery rating on the senior unsecured notes to 3 from 4.

The partnership plans to use the proceeds, along with a $147 million draw on its revolver, to repay $775 million of its outstanding senior unsecured notes.

“Following the transaction, we expect Suburban to prioritize paying down the outstanding borrowings on its revolving credit facility over the next year. Therefore, we forecast its leverage will be in the low 4x area for fiscal year 2021 (ending Sept. 30, 2021) and below 4x in fiscal year 2022. Given the volatility and unpredictability of weather patterns, any positive rating actions would depend on Suburban's ability to maintain leverage of less than 4x on a sustained basis,” S&P said in a press release.

The outlook is stable.

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