S&P Assigns 'B+' Corp. Rating to CVR Partners, LP (UAN); Outlook is Stable

S&P Global Ratings today assigned its 'B+' corporate credit rating to master limited partnership (MLP) CVR Partners L.P. (NYSE: UAN). The outlook is stable.

We assigned our 'B+' issue-level rating and '3' recovery rating to the company's $625 million senior secured notes due 2023. The '3' recovery rating indicates our expectation lenders can expect meaningful (50% to 70%; upper half of the range) recovery in the event of a payment default.

At the same time, we raised our corporate credit and issue-level rating on CVR Nitrogen L.P. to 'B+' from 'B-', in line with the rating on CVR Partners. The outlook is stable.

"Our 'B+' corporate credit rating on CVR Partners reflects our assessment of a weak business risk profile and aggressive financial risk profile," said S&P Global Ratings credit analyst Mike Llanos. The company recently closed on the acquisition of Rentech Nitrogen Partners L.P. Our ratings reflect the partnership's dependence on volatile ammonia and urea ammonium nitrate (UAN) prices, and its limited scale and geographic diversity. We have raised our ratings on CVR Nitrogen in line with that of CVR Partners as we view it to be a core subsidiary of CVR Partners.

The stable outlook on CVR Partners L.P. reflects our expectation the partnership will successfully integrate the newly acquired business while maintaining adequate liquidity and adjusted debt leverage in the 4x range.

We could lower the rating if the partnership's liquidity position weakens or if the newly acquired assets underperform, resulting in adjusted debt to EBITDA above 5x. This could also occur if consolidated credit measures at the ultimate parent, CVR Energy Inc., deteriorate.

We could consider higher ratings if the partnership meaningfully improves its scale and geographic diversity while maintaining adjusted debt leverage below 4x. However, we see that as unlikely in the next two years due to the partnership's limited scale and near-term integration risk related to the Rentech Nitrogen acquisition. Under this scenario, we would expect CVR Energy Inc.'s credit metrics to remain at current levels and its asset diversity to improve meaningfully.

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