Moody's rates Targa loan Ba3, notes B2

Moody's Investors Service said it assigned first-time ratings to Targa Resources Inc., including a Ba3 corporate family rating, a Ba3 rating to its proposed $2.4 billion senior secured credit facilities and a B2 rating to its proposed $350 million of senior unsecured notes.

The agency said the ratings are restrained by very high leverage, the company's limited operating history, the integration risks associated with the DMS transaction, which is a significant transformation for the company, and risks associated with the natural gas gathering and processing business in general including risks associated with commodity price changes, volume declines in areas where the company operates and competition from other companies in the business, several of which have significant financial resources.

Moody's noted the ratings are supported by the company's size and scale, which makes it one of the largest integrated companies in the midstream sector, expected de-leveraging over the near-term based on the proposed sale of the North Texas assets and expected de-leveraging over the medium-term based on free cash flow, which is supported by the company's contract profile and hedging positions that help mitigate the risks of potential changes in commodity prices, in addition to relatively low levels of maintenance capital expenditures.

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