Moody's rates Antero Midstream notes Ba3

Moody's Investors Service said it upgraded Antero Midstream Partners LP's 5 3/8% senior unsecured notes due 2024 to Ba3 (LGD 5) from B1 (LGD 5) and assigned a Ba3 (LGD 5) rating to the company's proposed $600 million senior unsecured notes.

Moody's also said it affirmed the company's Ba2 corporate family rating, Ba2-PD probability of default rating and SGL-3 speculative grade liquidity rating.

The outlook remains positive.

The upgrades reflect an increased proportion of unsecured debt in Antero Midstream's capital structure following the issuance of the proposed unsecured notes pursuant to the simplification transaction, Moody's said.

With the new debt offering, Antero will be able to free up revolver availability to comfortably fund the roughly $600 million cash portion of the simplification transaction that is expected to close in March 2019, the agency said.

The transaction also will simplify the corporate structure, Moody's said, and reduce the future distribution burden and the cost of capital by eliminating incentive distribution rights.

This partially offsets the negative impacts of higher leverage, the agency noted.

The ratings reflect the company's increased, but still manageable, financial leverage, excellent organic growth prospects, solid distribution coverage and strategic and operational importance to Antero Resources, the agency said.

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