info

Yes No
Moodys.com
Terms of Use
REGULATORY AFFAIRS
.
SUSTAINABILITY
.
DIVERSITY, EQUITY & INCLUSION
CAREERS
.
ABOUT US
.
CONTACT US
HOME
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Can't read?
Try a new set
Send Cancel
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
OK
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
OK
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

 

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

Terms of One-Time Website Use

 

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

 

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

 

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

 

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

 

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

Moody's changes EnLink LP's outlook to negative

07 Dec 2015

Approximately $2.8 billion of rated debt affected

New York, December 07, 2015 -- Moody's Investors Service (Moody's) affirmed EnLink Midstream Partners, LP's (EnLink LP) Baa3 unsecured ratings and change the rating outlook to negative from stable.

The rating actions are in response to EnLink LP's announcement that it is acquiring, in partnership with its General Partner, EnLink Midstream, LLC (EnLink GP, unrated), TOM-STACK, LLC and TOMPC LLC (collectively Tall Oak, subsidiaries of Tall Oak Midstream, LLC, a portfolio company for EnCap Flatrock Midstream, all unrated) for total consideration of $1.55 billion. EnLink LP is purchasing 84% of Tall Oak, with EnLink GP purchasing the remaining 16%. Of the $1.55 billion purchase price, $1.05 billion is to be paid to the sellers at closing, with the remaining $500 million due within twelve months of closing, with the option to defer $250 million of the final installment up to 24 months following the closing date. Closing of the acquisition is expected in the first quarter of 2016, subject to customary approvals. EnLink LP expects to finance the initial payment for Tall Oak with a new convertible preferred equity issuance of $750 million and $50 million in revolver drawings. EnLink GP will finance its payment through the issuance of $250 million of common units directly to the sellers. EnLink LP is responsible for funding the entire $500 million installment payment, which it plans to finance through additional common or preferred equity issuances or with proceeds from the sale of non-core assets.

"While the Tall Oak acquisition brings EnLink LP a number of strategic benefits, the negative rating outlook reflects the high price being paid for the acquisition, execution risk regarding the degree of EBITDA growth from the acquired assets, and the uncertainty of how the remaining $500 million installment payment will ultimately be financed, all of which could result in weaker leverage metrics through 2017," commented Gretchen French, Moody's Vice President.

Rating Actions: EnLink Midstream Partners, LP

....Senior Unsecured Bonds/Debentures, Affirmed at Baa3

....Senior Unsecured Shelf, Affirmed at (P)Baa3

.Outlook revised to Negative from Stable

RATINGS RATIONALE

The Tall Oak acquisition brings a number of strategic benefits to EnLink LP, including greater scale, diversification, and a coordinated growth strategy with the majority owner of EnLink GP, Devon Energy Corporation (Devon, Baa1, under review for downgrade). The Tall Oak transaction will give EnLink LP a strong footprint in the STACK play in Oklahoma, with assets being acquired that are adjacent to EnLink LP's existing position in the Cana-Woodford play of Oklahoma. The acquisition represents a coordinated growth strategy with Devon, which, with its purchase of Felix Energy, is acquiring the upstream assets in the STACK for $1.9 billion. Devon has agreed to enter into five-year, fee-based, minimum volume contracts with EnLink LP in order to support a certain level of cash flows from the acquisition. Devon will become a major customer and has outlined the STACK as one of its core and higher return plays.

However, EnLink LP's initial entry cost into the STACK is very expensive and EnLink LP will need to spend capital to complete growth projects underway. Achieving improved acquisition economics is contingent on the successful completion of growth projects and achieving higher levels of EBITDA.

The STACK play remains an emerging play, with growing, but limited production history; and, EnLink LP is acquiring assets that have been largely under development in 2015, with the main gas processing plant, Chisholm, coming on line only in October 2015. In addition, EnLink LP will be undertaking growth capital of about $350 million in 2016 to further expand the gathering system and the Chisholm plant's processing capacities. As such, Tall Oak's EBITDA levels in 2015 have been limited and free cash flow negative. While EBITDA should grow in 2016 based on the expansion of the processing plant and the support of Devon contracts, EBITDA levels in 2016 are projected to be modest compared to the cost of the acquisition, resulting in a purchase price multiple around 20x (based on the total purchase price as compared to projected 2016 EBITDA levels).

There is also uncertainty to actual volumes that flow through the Tall Oak assets in 2016 and into 2017, which could constrain EBITDA growth levels. The weak commodity price outlook and constrained capital market access in the energy space has resulted in constrained drilling budgets and negative production outlooks for a number of upstream companies. Outside of Devon, there is uncertainty as to the credit quality of the remaining counter parties to Tall Oak. The assets also contain a smaller position in the Mississippi Lime.

Inability to achieve higher levels of EBITDA from the Tall Oak assets could result in weaker leverage metrics through 2017 for EnLink LP, well above management's initial leverage goals of debt/EBITDA of less than 3.5x. Furthermore, there remains uncertainty and execution risk regarding how the $500 million installment payment is ultimately financed. The company is targeting funding the installment payment through additional common or preferred issuance or non-core asset sales. EnLink LP is financing the initial funding of the acquisition largely with a new convertible preferred equity issuance, which Moody's views as having certain equity-like characteristics. However, the utilization of the preferred instrument does create more complexity in EnLink LP's capital structure.

EnLink LP's Baa3 rating reflects its strategic and operational importance to Devon and the long-term contractual links between the entities. On a stand-alone basis, we view EnLink LP's credit profile as more consistent with a Ba1 rating. We notch up one-notch to Baa3 based on our expectation that Devon will continue to support EnLink LP's growth through appropriately funded asset drop-downs and fee-based contracts.

EnLink LP's stand-alone credit profile benefits from a very high proportion of fee-based revenue and strong amount of minimum volume commitments that provide volume stability and support cash flow visibility over the next several years. These strengths are partially offset by EnLink LP's concentration in the mature Barnett Shale, where volumes have been in decline, and the need to continue to offset this exposure through growth in other regions. The rating is also restrained by EnLink LP's still fairly limited track record at its current size and scale, its high growth strategy, and the inherent risks associated with its high-payout MLP business model.

EnLink LP should have adequate liquidity through 2016, although liquidity could tighten if the company funds the $500 million installment payment under its revolver. As of September 30, 2015, EnLink LP had $175 million drawn and $3 million in letters of credit under its $1.5 billion unsecured revolving credit facility, which matures in May 2020. The credit facility is only subject to customary MACs on matters such as litigation, taxes, environmental liabilities and legal compliance. Financial covenants include a maximum total leverage covenant of 5.0x (relaxed to 5.5x after an acquisition). EnLink GP also has a $250 million revolving credit facility that is secured by its equity interests in EnLink LP. The facility matures in March 2019, with no drawings at September 30, 2015. Financial covenants under the EnLink GP revolver includes a maximum total leverage covenant of 4.0x (relaxed to 4.5x after an acquisition) and a minimum interest coverage ratio of 2.25x (which falls away in the event of investment grade ratings). We expect the company to remain in covenant compliance through early 2016 at both EnLink LP and EnLink GP.

The negative outlook reflects the risk that financial leverage will be elevated through early 2017, with financial leverage potentially exceeding 5.0x debt/EBITDA, per Moody's assumptions and adjustments.

EnLink LP's ratings could be downgraded if EnLink LP is not successful in growing EBITDA and financing the $500 million installment payment without impairing leverage (such that there is a clear trajectory to financial leverage being restored to around 4.5x debt/EBITDA, per Moody's assumptions and adjustments). Because of the strategic connections between EnLink and Devon, a downgrade of Devon of more than one-notch could also result in a downgrade of EnLink LP.

EnLink LP's ratings could be upgraded if the partnership is able to continue to diversify its geographic exposure away from the Barnett while maintaining its fee-based focus and lowers its financial leverage to under 4.0x (as adjusted per Moody's).

The principal methodology used in these ratings was Global Midstream Energy published in December 2010. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

EnLink Midstream Partners, LP, headquartered in Dallas, Texas, is a publicly traded master limited partnership.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Gretchen French
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Steven Wood
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's changes EnLink LP's outlook to negative
No Related Data.
© 2022 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY100,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​
Moodys.com