S&P drops SunCoke notes to B+

Standard & Poor's said it lowered its issue-level rating on SunCoke Energy Partners LP's (SXCP) 7¾% senior unsecured notes due 2020 to B+ from BB- following the company's proposed $250 million add-on.

The one-notch downgrade reflects the revision of the recovery rating on SXCP's unsecured debt to 5 from 3, which indicates an expectation for modest (10% to 30%) recovery in the event of a payment default.

S&P said the lower recovery projection reflects higher debt levels and a larger revolving credit facility in the capital structure at SunCoke Energy Partners, which in the agency's view will result in lower overall recovery for the noteholders.

S&P expects the company to use the proceeds from the incremental debt, along with proceeds from a concurrent public equity offering, to fund the acquisition from parent company SunCoke Energy Inc. (SXC) of an additional 33% membership interest in each of Haverhill and Middletown, including the repayment of about $260 million of SXC's debt. SunCoke Energy Partners will also repay about $40 million of outstanding borrowings under its own revolving credit facility.

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