OREANDA-NEWS. S&P Global Ratings today assigned its 'BB' corporate credit rating to master limited partnership (MLP) Antero Midstream Partners LP. The outlook is stable.

We also assigned our 'BB' issue-level rating and '4' recovery rating to Antero Midstream's $500 million senior unsecured notes due 2023. The '4' recovery rating indicates that lenders can expect average (30% to 50%; higher half of the range) recovery in the event of a payment default.

"Our 'BB' corporate credit rating on Antero Midstream reflects our assessment of a fair business risk profile and significant financial risk profile," S&P Global Ratings analyst Stephen Scovotti said.

Antero Midstream is a publicly traded MLP that exploration and production company (E&P) Antero Resources formed to own, operate, and develop midstream assets in the Marcellus and Utica shales. Antero Resources owns approximately 61% of Antero Midstream's units, and has dedicated substantially all of its current and future acreage to Antero Midstream under long-term fixed fee gathering compression, and water services contracts. Antero Midstream receives the vast majority of volumes from Antero Resources in relatively concentrated areas in the Marcellus and Utica shales. We view Antero Midstream as strategically important to Antero Resources.

The stable outlook on Antero Midstream Partners LP reflects our expectation that the company will continue to grow volumes due to growth in production at Antero Resources We expect the company to maintain debt to EBITDA of about 3x and FFO to debt of about 30% over the next year, while maintaining our view of adequate liquidity.

We could lower the ratings if debt to EBITDA increased above 4x and FFO to debt decreased below 20% on a sustained basis. This could occur if the company adopts a more aggressive financial profile or undertakes a debt financed acquisition.

Although unlikely in the near-term, we could raise the ratings if the company adopts a more conservative financial profile, including debt to EBITDA below 2x and FFO to debt above 45% on a sustained basis, while increasing the size, scale, and diversity of the business.