Moody's assigns Kinetik, notes Ba1

Moody's Investors Service said it assigned first-time ratings to Kinetik Holdings LP, including a Ba1 corporate family rating, a Ba1-PD probability of default rating and a Ba1 rating to its planned $1 billion of senior unsecured notes. Moody's also assigned an SGL-1 speculative grade liquidity rating. The outlook is stable.

Kinetik is a fully-owned subsidiary of Kinetik Holdings Inc., which was formed through the combination of Altus Midstream and BCP Raptor Holdco. Raptor owns BCP Raptor LLC and BCP Raptor II LLC along with other midstream assets.

Kinetik plans to use the proceeds to pay off debt at the Raptor subsidiaries, debt at Altus Midstream and partially redeem preferred notes at Kinetik Midstream. Kinetik will also use the proceeds from its new, unrated $2 billion unsecured term loan to repay debt. Pro forma for the planned financing transaction, Kinetik's capital structure will consist of a $1.25 billion unsecured revolver, a $2 billion unsecured term loan A, $1 billion of unsecured notes and about $500 million of preferred notes.

Once, Kinetik repays the debt at BCP Raptor LLC and BCP Raptor II LLC, all their ratings will be withdrawn, the agency said.

"Kinetik's ratings reflect the company's scale, resilient asset profile and low debt leverage somewhat offset by the company's meaningful volume risk through its gathering and process segment and basin concentration in the Delaware Basin," said Sreedhar Kona, a Moody's senior analyst, in a press release.

"Kinetik's strong cash flow visibility is underpinned by fee-based contracts that help the company maintain its low debt leverage and good distribution coverage, and the company's very good liquidity contribute to the stable outlook," Kona added.

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