Fitch: Mixed Outlooks for U.S. Midstream Subsectors Given Persistent Headwinds
Commodity price weakness continues with no relief in sight in the near
term, according to Fitch Ratings. Despite this, the credit ratings and
sector outlooks for U.S. pipeline and midstream assets are generally
stable. However, Fitch remains negative on midstream services,
particularly gathering and processing which has a negative rating and
Fitch's outlooks cover the crude oil and refined products pipelines,
midstream services, master limited partnerships, and natural gas
In the upcoming year, natural gas, crude oil and refined product
pipelines should generate fairly stable cash flows given the lack of
direct commodity price exposure. Given expectations for lower domestic
crude production, crude pipeline volumes are likely to fall in the
mid-single digits. Refined products pipelines are expected to have a
modest uptick driven by demand for lower priced products such as
gasoline. Natural gas pipelines should be insulated from production and
price changes, as well, given their contract profiles, though
recontracting risk on underutilized systems remains a concern. Should
commodity prices remain under pressure over a longer-term timeframe,
Fitch would expect a pullback or delay in spending on new infrastructure
For midstream services, continued low commodity prices, increased
counterparty risk, potential volume declines, constricted capital market
access and rising leverage could pressure ratings and Outlooks for
midstream services issuers. Slower demand for midstream services will be
driven by moderating NGL production growth. Fitch expects low NGL prices
and falling demand to drive negative headwinds for growth in the
midstream services segment.
Across all of the sectors, liquidity remains sufficient though reliance
on revolver borrowings is expected in the near to medium term. Debt
maturity schedules are manageable. Access to capital market access
should remain sufficient though more costly, particularly for low
investment grade and all high yield issuers.
The following outlooks are available at 'www.fitchratings.com':
--'2016 Outlook: U.S. Crude Oil and Refined Products Pipelines'
--'2016 Outlook: U.S. Midstream Services'
--'2016 Outlook: U.S. Natural Gas Pipelines'
Additional information is available at 'www.fitchratings.com'.
2016 Outlook: Crude Oil and Refined Products Pipelines (Positioned for
Stability Despite Ongoing Commodity Price Weakness)
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF
THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE
RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR
RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY
CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
View source version on businesswire.com: http://www.businesswire.com/news/home/20151201006670/en/
Copyright Business Wire 2015
Source: Business Wire
(December 1, 2015 - 3:27 PM EST)
News by QuoteMedia