S&P affirms Buckeye Partners

Standard & Poor's said it affirmed its BBB corporate credit rating on Buckeye Partners LP, following the firm's announcement to acquire Farm & Home Oil Co. for $145.5 million.

The outlook remains negative.

The agency said that the acquisition continues the company's trend of dealing outside its core refined product competencies and raises concerns that Farm's fuel-distribution business could introduce commodity risk into Buckeye's credit profile and detract from its stable, fee-based cash flows.

S&P added that these concerns are partially mitigated by Buckeye's intent to fully finance the Farm acquisition with equity and the fact that it is anticipated to represent only about 8% of pro forma consolidated EBITDA.

"The ratings, however, have no cushion to withstand any further deterioration in Buckeye's business mix or credit metrics," said S&P credit analyst Michael Grande.

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