NuStar Energy L.P. Outlook Revised To Negative From Stable On Maturing Debt And Tough Markets; Ratings Affirmed

  • NuStar Energy L.P. faces $750 million of debt coming due through February 2021. Given current market conditions, we believe NuStar could have difficulty refinancing. As a result, we have revised our outlook to negative.
  • At the same time, we are affirming our 'BB-' issuer credit rating and 'BB-' issue-level ratings on the partnership's senior unsecured debt and 'B' issue-level rating on its subordinated notes. The '3' recovery rating on the senior unsecured debt and '6' recovery rating on the subordinated notes are unchanged.
  • The negative outlook reflects our expectation of debt to EBITDA of approximately 5.9x in 2020.
NEW YORK (S&P Global Ratings) March 23, 2020--S&P Global Ratings today took the rating actions listed above.
NuStar Energy L.P. faces significant refinancing risk over the next 12 months.   NuStar has $450 million of notes maturing in September 2020 and $300 million maturing in February 2021. Additionally, NuStar recently amended its revolving credit agreement, extending the maturity to 2023 and downsizing it to $1 billion from $1.2 billion. As of Dec. 31, 2019, NuStar had $475 outstanding on the credit facility. Given current market conditions, we believe NuStar could face difficulty refinancing the upcoming maturities for a longer term and it does not have sufficient revolver capacity to fund the maturities coming due over the next 12 months.
The negative outlook reflects our view that NuStar could face challenges refinancing the $750 million of debt they have maturing through February 2021.
We could consider lowering the rating if NuStar is unable to extend its maturity profile soon. This could occur due to public debt markets remaining challenged preventing NuStar from refinancing.
We could return the outlook to stable if NuStar successfully refinances its 2020 and 2021 maturities for longer terms
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