EnLink Midstream Partners, LP (EnLink LP) ratings outlook has changed from stable to negative.
EnLink LP’s Baa3 rating, the lowest investment grade rating by Moody’s, is considered medium grade and often speculative. In addition, the rating reflects moderate credit risk.
According to Moody’s, the rating’s outlook change is in response to EnLink LP’s announcement of an acquisition for approximately $1.55 billion.
Moody’s reports, EnLink LP is purchasing 84% of Tall Oak, with the general partner purchasing the remaining 16%. At closing, $1.05 billion is to be paid with the remaining $500 million due within twelve months.
Moody’s Vice President Gretchen French states, “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.”
In addition, Moody’s reported that the ratings were restrained by EnLink LP’s limited track record, high growth strategy and the risks associated with its high-payout MLP business model.
The White Law Group continues to investigate the liability that brokerage firms may have for recommending high-risk MLPs like EnLink LP. For more information on the firm’s investigation, visit http://www.whitesecuritieslaw. com/2015/11/04/recovery-of- enlink-midstream-investment- losses/.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida. The firm represents investors in claims against their brokerage firm throughout the country.
For more information on the firm and its securities arbitration practice, visit www.whitesecuritieslaw.com. For a free consultation.