Moody’s lowers Gemini HDPE loan

Moody's Investor Service said it downgraded the rating on Gemini HDPE, LLC's senior secured term loan to Ba3 from Ba2 and revised its outlook to stable from negative.

The downgrade considers continuing construction issues, including a delay in expected completion into 2017 compared to the original completion expectation of 2016, Moody’s said.

The agency said it sees the heightened construction risk as positioning the project's rating closer to Ineos Group Holdings SA's rating given the increased reliance on the project's completion agreements backed by Ineos and Sasol Financing.

The downgrades also recognize the project's reduced competitiveness since 2014 given lower global oil prices and the potential for future market oversupply, Moody’s said.

The ratings also consider Ineos’ deep involvement in the project as operator, technology provider and Gemini's location within Ineos’ manufacturing complex, the agency said.

The ratings also are affected by refinancing risk for about 50% of the debt, Moody’s said, and the lack of reserves, including a debt-service reserve.

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