Moody's rates Hess Midstream notes Ba3

Moody's Investors Service said it assigned a Ba3 rating to Hess Midstream Operations LP's planned issuance of senior unsecured notes. HESM Opco's ratings, including its Ba2 corporate family rating and its stable outlook are not affected by this action.

The notes’ rating is the same as its other senior unsecured notes and one notch below its Ba2 CFR in consideration of the priority claim that its $1 billion revolving credit facility and $400 million term loan A have relative to the company's assets, the agency said.

On Tuesday, Hess Midstream LP, the publicly traded parent company of HESM Opco, agreed to repurchase $750 million of HESM Opco's class B units from Hess Corp. and Global Infrastructure Partners, who control HESM through their joint ownership of HESM's general partner.

The proceeds of the new notes will be used to fund this units repurchase.

"Hess Midstream's debt-funded equity repurchase meaningfully increases financial leverage and is therefore negative to its credit profile," commented Pete Speer, a Moody's senior vice president, in a press release. "However, the company's leverage had declined to low levels relative to peers and remains well within the range acceptable for its rating following this transaction."

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