Sunoco LP (SUN) Assigned 'BB' Rating by S&P; Outlook Stable

Standard & Poor's Ratings Services said today it assigned its 'BB' corporate credit to Sunoco L.P. (NYSE: SUN). The outlook is stable.

At the same time, we assigned a 'BB' issue-level rating and a '4' recovery rating to the senior unsecured notes due 2023. The '4' recovery rating (lower half of the range) indicates that lenders can expect average (30% to 50%) recovery of principal if a payment default occurs. At the same time, we assigned a 'BB+' issue-level rating to the company's senior secured revolving credit facility. We also assigned a '2' recovery (lower half of the range) to the credit facility. The '2' recovery rating indicates substantial (70% to 90%) recovery.

The ratings on Sunoco reflect the partnership's "satisfactory" business risk profile and "aggressive" financial risk profile. The "satisfactory" business risk profile incorporates the entity's large size and scale of operations compared with peers and generally stable cash flow coming from convenience store sales, which is offset by its low profit margins and the industry's high competitive pressures. The "aggressive" financial risk profile reflects our expectation for pro forma debt to EBITDA in the 4.5x area in 2015, adequate liquidity, and the master limited partnership structure that gives the
partnership incentive to distribute nearly all free cash flow after maintenance expenses to unitholders each quarter.

"The stable outlook reflects our belief that the partnership will maintain near-term total debt to EBITDA in the 4.5x area and adequate liquidity as it funds organic growth and acquires assets from ETP," said Standard & Poor's credit analyst Nora Pickens.

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