S&P cuts Summit Midstream

S&P said it downgraded Summit Midstream Partners LP (SMLP) to CCC from B following the acquisition of Summit Midstream Partners LLC, which is the owner of its general partner of Summit Midstream Partners Holdings LLC.

The agency slashed its rating on Summit Midstream Holdings LLC’s senior unsecured debt to CCC- from B-, reflecting the 5 recovery rating. The 5 recovery rating reflects S&P’s expectation of modest (10%-30%; rounded estimate: 20%) recovery in the event of a default.

Also, S&P cut the rating on SMLP’s preferred stock to C from CCC, two notches below SMLP’s issuer credit rating to reflect its subordination within the capital structure, and one additional notch for deferability.

“SMP Holdings is now a nonstrategic subsidiary of the partnership and will be rated in line with the issuer credit rating on SMLP. As a result, we are lowering the issuer credit rating on SMP Holdings to CCC from B-,” S&P said in a press release.

The agency also sliced the rating on SMP Holdings’ senior secured debt to CC from B-, reflecting the 6 recovery rating and the structural subordination in the pro forma capital structure. The debt at SMP Holdings will be structurally subordinated to all other debt in SMLP’s consolidated capital structure because this debt has no guarantees and is non-recourse to SMLP. The 6 recovery rating reflects S&P’s expectation of negligible (0%-10%; rounded estimate: 0%) recovery in the event of a default.

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