Moody’s gives Tesoro Logistics notes Ba3

Moody's Investors Service said it assigned a Ba3 rating to Tesoro Logistics, LP’s (TLLP) proposed aggregate offering of $600 million senior unsecured notes.

The notes are being co-issued by Tesoro Logistics Finance Corp.

The company primarily intends to use the proceeds to repay borrowings outstanding under both of Tesoro’s revolving credit facilities.

Tesoro’s Ba2 corporate family rating, stable outlook and all other ratings are unchanged.

As of March 31, Tesoro had a combined $535 million outstanding under its revolving credit facilities. Borrowings consisted of $285 million of borrowings outstanding under its $600 million revolver and $250 million outstanding under its $1 billion dropdown revolver. The $600 million of proceeds from this offering will solidify the company's liquidity, ensuring ample availability under both revolvers throughout 2016.

"TLLP's proposed bond offering is a largely debt neutral transaction which will provide full borrowing capacity under its revolving credit facilities to fund its continued growth," Moody's vice president, senior analyst Arvinder Saluja said in a news release.

The senior unsecured notes are rated Ba3, reflecting their junior position to both senior secured first-lien revolving credit facilities' priority claim to company assets, Moody’s said.

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