S&P rates Lower Cadence loan B

S&P said it assigned a B issuer credit rating to Lower Cadence Holdings LLC.

The agency also said it assigned the B rating and 3 recovery rating to the company's $1.5 billion secured first-lien term loan due 2026.

The outlook is positive.

The B issuer credit rating on Lower Cadence reflects a view of the company's relatively small scale, exposure to volumetric risk and limited geographic diversity, S&P said.

The agency said it expects leverage to be high under the base-case scenario.

S&P said it forecasts leverage of 8.3x in 2019, dropping to between 5.5x and 6x in 2020.

The agency said it believes that Lower Cadence's developed asset base and downstream connectivity advantages might lead to volume growth above expectations, resulting in further de-leveraging in 2019 and 2020.

Lower Cadence has limited commodity and geographic diversity, concentrated in crude gathering and transport in the Delaware Basin, S&P said.

Partly offsetting this is the very low oil-break-evens that could sustain crude volumes at even low oil prices, the agency said.

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