Delek Logistics Partners, LP — Moody's announces completion of a periodic review of ratings of Delek Logistics Partners, LP
Announcement of Periodic Review: Moody’s announces completion of a periodic review of ratings of Delek Logistics Partners, LP
Global Credit Research – 07 Aug 2020
New York, August 07, 2020 — Moody’s Investors Service (“Moody’s”) has completed a periodic review of the ratings of Delek Logistics Partners, LP and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody’s reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since 1 January 2019, Moody’s practice has been to issue a press release following each periodic review to announce its completion.
This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
Key rating considerations are summarized below.
Delek Logistics Partners, LP’s (DKL) B1 Corporate Family Rating reflects its modest leverage, stable cash flow from long-term, fee-based contracts, high distributions associated with the MLP model, and customer concentration risk with its parent, Delek US Holdings, Inc. (DK, Ba3), as its largest customer and little ability to replace DK’s cash flow should it experience refinery downtime. However, contracts with DK are subject to minimum volume commitments and DKL is strategically important to its parent, as the MLP provides critical infrastructure that is integrated into DK’s refining operations, a coordinated growth strategy and a source of external financing. DKL has moderate leverage and ample potential growth opportunities from organic projects as well as acquisitions. DK has midstream assets that can be dropped to DKL, and joint ventures such as the Red River Pipeline, support EBITDA growth and increased exposure to third parties.
This document summarizes Moody’s view as of the publication date and will not be updated until the next periodic review announcement, which will incorporate material changes in credit circumstances (if any) during the intervening period.
The principal methodology used for this review was Midstream Energy published in December 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
This announcement applies only to EU rated and EU endorsed ratings. Non EU rated and non EU endorsed ratings may be referenced above to the extent necessary, if they are part of the same analytical unit.
This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
James Wilkins Vice President - Senior Analyst Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Steven Wood MD - Corporate Finance Corporate Finance Group JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653
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