Southcross Energy Partners LP risks defaulting by the end of the first quarter of 2019 if the company does not amend its credit facilities, S&P Global Ratings warned.
Downgrading Southcross Energy's issuer credit and senior secured debt ratings to CCC- from CCC with negative outlooks on Dec. 19, S&P Global analysts said that without a "a substantial equity infusion from its sponsors or a third party," the partnership will need either covenant waivers or revised credit facilities to avoid a debt crisis.
"Southcross had a total leverage ratio of 8.6x as of Sept. 30, 2018. The partnership currently has about $523 million of total debt outstanding," they wrote in a note to clients. "Without an extension, Southcross' auditors will not provide the required going concern opinion for the partnership's first quarter 2019 financial statements, which would put the partnership in default."
The ratings revision followed a September downgrade that came two months after Southcross Energy terminated its planned merger with American Midstream Partners LP.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found in the Sources section.