Moody’s assigns Ba3 to Sunoco notes

Moody's Investors Service said it assigned a Ba3 rating to Sunoco LP's (SUN) proposed $500 million note offering.

Sunoco's Ba2 corporate family rating, Ba2-PD probability of default rating and SGL-3 speculative grade liquidity rating is unchanged, as is the Ba3 rating on existing senior unsecured notes.

The outlook remains stable.

Proceeds will be used to partially fund the consideration for the asset dropdown of Susser Holdings Corp.’s retail assets into Susser Petroleum Property Co. LLC, a wholly owned subsidiary Sunoco from its general partner Energy Transfer Partners, LP. The remaining portion of the roughly $1.94 billion transaction will be funded through a combination of revolver borrowings and issuance of about $967 million in new Sunoco units to Energy Transfer.

Energy Transfer acquired Susser Holdings in August 2014.

"The proposed transaction continues the anticipated process of financing the separation of the retail motor fuels business from Energy Transfer Partners, LP (ETP, Baa3 stable) into SUN in a tax-efficient manner," Moody’s senior analyst Mickey Chadha said in a news release.

"Through 2016, in a series of sequenced asset dropdowns, ETP intends to contribute all of the remaining retail and wholesale assets to SUN and we continue to expect future dropdowns to be financed with a balanced mix of debt and equity with debt leverage falling to 4.0 times or lower once the planned asset dropdowns have been completed.”

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