S&P downgrades Archrock

Standard & Poor’s said it lowered the corporate credit rating on Archrock Partners LP to B from B+.

The outlook is negative.

The agency also said it lowered the rating on the $350 million senior unsecured notes due 2021 and $350 million senior unsecured notes due 2022 to B- from B.

The recovery rating on this debt remains at 5, indicating 10% to 30% expected default recovery.

S&P also said it lowered the rating on the company’s senior secured revolving credit facility and term loan to BB- from BB. The recovery rating on this debt remains at 1, indicating 90% to 100% expected default recovery.

In November 2015, Exterran Holdings Inc. and Exterran Partners LP changed their names to Archrock Inc. and Archrock Partners LP, respectively, following Exterran Holdings’ spin-off of its international compression services and fabrication businesses into a new company named Exterran Corp.

The downgrades reflect an expectation of continued weakness in natural gas prices through at least the end of 2016, which could result in reduced natural gas production, the agency said.

The company benefits from a fair degree of revenue visibility and relatively stable cash flow, S&P said.

But, its compression business is still exposed to the inherent cyclicality of commodity prices and spending levels of the oil and gas exploration and production industry, the agency said.

Archrock’s operating cash flows also are potentially vulnerable due to its relatively short average contract life combined with low commodity prices, S&P added.

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