S&P rates Genesis Energy notes BB+

S&P said it assigned a BB+ long-term issue credit rating to the proposed subordinated capital securities to be issued by Genesis Energy Ltd.

The agency said it rated the capital securities two notches lower than Genesis Energy's stand-alone credit profile of BBB and three notches lower than the issuer credit rating of BBB+ on the company.

This reflects the securities' subordinated status and optional deferability, S&P said.

The agency said it expects to assign intermediate equity content to the issuance based the optional deferral of coupon payments for up to five years, no material step-up of the margin, the instrument's subordinated recovery position relative to all senior unsecured creditors of the group and equal ranking with Genesis Energy's other subordinated debt.

Given the intermediate equity content, S&P said it will classify 50% of the principal as equity and 50% of the coupon payments as distributions when calculating the financial ratios for the company.

S&P said it expects Genesis Energy to use the proceeds from the issuance to finance the acquisition of Nova Energy's liquefied petroleum gas distribution business.

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