Moody’s: Sunoco Logistics view to negative

Moody's Investors Service said it affirmed Sunoco Logistics Partners Operations LP's (SXL) Baa3 senior unsecured rating, P-3 commercial paper rating and changed its outlook to negative from stable.

The agency also affirmed Energy Transfer Partners, LP's (ETP) Baa3 senior unsecured rating, P-3 commercial paper rating and negative outlook.

Moody’s said the change in Sunoco Logistics’ outlook reflects its Nov. 21 announcement that it will acquire Energy Transfer in an all-units transaction and assume Energy Transfer’s debt.

The proposed transaction will have no impact at this time on Energy Transfer Equity, LP's (ETE) Ba2 corporate family rating, Ba2 senior secured debt rating or negative outlook.

"While the roll up of ETP into SXL will re-set the ETP distribution at a reduced level, immediately restoring positive distribution coverage to the combined entity, and will add to the simplification of the overall Energy Transfer complex, consolidated leverage remains excessive, a function of ETP's weak 2016 EBITDA growth," Moody's vice president Andrew Brooks said in a news release.

"Presuming SXL/ETP can successfully bring projects currently under construction into commercial service in the 2017-2018 time frame, Moody's expects leverage to decline to levels more appropriate for the Baa3 rating."

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