Midwest Connector Capital Company LLC Assigned 'A-' Ratings; Outlook Stable


  • Midwest Connector Capital Co. LLC (MCCC), a financing subsidiary of the Dakota Access Pipeline (DAPL), which is a joint venture between Energy Transfer LP (ET) and Phillips 66 Partners LP (PSXP), plans to issue $2.5 billion of senior unsecured notes.
  • MCCC co-owner ET operates the Bakken Pipeline and, along with PSXP, appoints the board and oversees strategic decisions at DAPL and ETCO. The pipeline system is indirectly owned by ET (38.25%), Enbridge Energy Partners L.P. (27.56%), PSXP (25.00%), and MPLX LP (9.19%).
  • The company intends to use the proceeds from the notes to refinance the existing senior secured credit facilities at DAPL and the Energy Transfer Crude Oil Pipeline (ETCO), which collectively make up the Bakken Pipeline system.
  • We are assigning our 'A-' issuer credit rating to Midwest Connector.
  • At the same time, we are assigning our 'A-' issue-level rating to the company's senior unsecured notes.
  • The stable outlook reflects our expectation that the pipeline will maintain its strong competitive position supplying crude oil from the Bakken shale region to the U.S. Gulf coast and its strong credit measures, with total debt-to-EBITDA of about 2.2x and a funds from operations (FFO)-to-debt ratio in the low-40% area.
NEW YORK (S&P Global Ratings) March 4, 2019--S&P Global Ratings today took the 
rating actions listed above. The rating reflects that MCCC is entitled to all 
of the cash flow from the Bakken Pipeline system, which maintains an unmatched 
position as the most cost-efficient method for transporting Bakken and Three 
Forks crude oil to waterborne markets in the U.S. Gulf Coast. The rating also 
reflects the highly predictable nature of the company's cash flows, which are 
supported by long-term take-or-pay contracts with mostly investment-grade 
shippers (for over 95% of its committed volumes). 

The stable outlook on MCCC reflects our expectation that the pipeline will 
maintain its strong competitive position supplying crude oil from the Bakken 
shale region to the U.S. Gulf coast and its strong credit measures, with total 
debt-to-EBITDA of about 2.2x.

We could lower our ratings on MCCC if its debt-to-EBITDA increases above 3x on 
a sustained basis. This could occur if the company undertakes a leveraged 
capital expansion project or if there is a secular change in crude demand, 
which could heighten its recontracting risk. However, we view both of these 
risks as extremely low given the company's short-operating history and the 
pipeline's highly contracted nature.

We view an upgrade as unlikely. However, we could consider raising our ratings 
on MCCC if its sponsors committed to maintain a notably more conservative 
financial policy that would allow the company to sustain total debt-to-EBITDA 
below 2x.
We work across the world

From London to San Francisco, to our home base in (Saint Helier) Jersey, we’re looking for extraordinary and creative scientists to help us drive the field forward.

AC Investment Inc. currently does not act as an equities executing broker or route orders containing equities securities. If AC Invest’s business model were to change and it begins routing non-directed orders in NMS securities, it will comply with the disclosure requirement of Rule 606.

77 Massachusetts Avenue Cambridge, MA 02139 617-253-1000 pr@ademcetinkaya.com