Moody’s gives Southcross, loans Caa2

Moody's Investors Service said it assigned Southcross Holdings Borrower LP a Caa2 corporate family rating, a Caa2-PD probability of default rating and a Caa2 rating to its two tranches of senior secured term loans.

The outlook is stable.

These ratings were assigned following Holdings' emergence from bankruptcy on April 13.

Concurrent with these actions, Moody's changed Southcross Energy Partners, LP's outlook to stable from negative. Its Caa1 corporate family rating, Caa1-PD probability of default rating and Caa1 senior secured term loan rating were affirmed. The speculative grade liquidity rating was changed to SGL-3 from SGL-4.

"Holdings has a more tenable capital structure following the extinguishment of roughly $700 million of debt and preferred equity through the bankruptcy process,” Moody's assistant vice president, analyst Sajjad Alam said in a news release.

"Although cash flow generation will remain weak in 2016, Holdings does have a significant cash balance that could be used to manage capital expenditures, interest payments and likely equity cure payments to Southcross through 2017. Southcross' stable rating outlook reflects the improved financial health of its general partner (GP), and the enhanced liquidity afforded by the suspension of cash distributions."

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