Moody's cuts Suburban Propane to negative

Moody's Investors Service said it changed Suburban Propane Partners, LP's outlook to negative from stable.

The agency said it affirmed the Ba2 corporate family rating, Ba2 probability of default rating and Ba3 senior unsecured note ratings on the company. Moody's said it also assigned a SGL-3 Speculative Grade Liquidity rating.

The agency said the change to a negative outlook follows the company's announcement that it has reached a definitive agreement to acquire Inergy, L.P.'s retail propane assets for $1.8 billion.

"The negative outlook reflects increased leverage pro forma for the planned acquisition, with debt/EBITDA above 5.0x," said Jonathan Kalmanoff, a Moody's analyst in a news release.

"We view debt/EBITDA below 4.0x as appropriate for the Ba2 CFR over the long term, and believe the company can achieve this through a return to more normal winter weather and debt reduction from the proceeds of an anticipated equity issuance of about $350 million."

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