Fitch rates Kinetik, notes BB+

Fitch Ratings said it assigned a BB+ long-term issuer default rating to Kinetik Holdings LP and BB+/RR4 ratings to the partnership's planned offering of senior unsecured notes and senior unsecured credit facility. Kinetik is a subsidiary of Kinetik Holdings Inc. The outlook is positive.

“Kinetik's ratings are based on the company's large annual EBITDA, segment diversity, customer diversity, a largely fee-based revenue stream, and a measure of revenue-assurance features in contracts that provide cash flow. The Permian basin location is a moderate positive since similarly sized comparable companies also enjoy basin diversity,” Fitch said in a press release.

Kinetik will use the note proceeds primarily to repay debt of subsidiaries of Kinetik LP, including but not limited to term loans at BCP Raptor LLC (B/stable) and BCP Raptor II, LLC (B/stable). At the closing of the notes' transaction and the repayment of these rated term loans, Fitch said it plans to withdraw the ratings of these two borrowers.

“The positive outlook is based on steady volume growth that Fitch expects to continue for the legacy Raptors and on customer drilling and completion activity located in advantageous positions given the Raptor's solidly built-out network,” the agency said. Fitch forecasts Kinetik’s 2023 leverage, “in the 3.7x-3.9x area which positions the company strongly in its rating category.”

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