S&P Global Ratings placed Plains All American Pipeline LP's credit, already one step away from junk status, on negative watch following bleak second-quarter results and a potential dividend cut floated by the partnership's management.

"Plains' credit measures will be substantially weaker than our previous forecast and ... structural changes in the partnership's [supply and logistics] business segment have added more volatility to its EBITDA and cash flow predictability than we've previously considered," analyst Michael Grande wrote in S&P's update on Plains. "We also believe there is some risk to the partnership's base business, from new pipeline builds and increased competition, such that there could be some downside to transportation and facilities segment cash flow under certain scenarios."

The rating agency announced Aug. 14 that it placed on CreditWatch Negative Plains' BBB- corporate credit rating and BBB- issue-level rating on senior unsecured notes, as well as the A-3 short-term rating for both Plains, a pipeline master limited partnership, and operating subsidiaries PAA Finance Corp. and Plains Midstream Canada ULC.

Grande also downgraded Plains' management and governance score from satisfactory to fair and noted that the agency plans to resolve the negative listing within the next two to three months.

S&P Global Ratings' announcement followed a Plains credit downgrade by Fitch Ratings to the lowest investment-grade rating and a decision by Moody's to change its outlook from negative to "under review" for the partnership's Baa3 senior unsecured rating, also the lowest before junk status.

Plains' supply and logistics segment, hurt by competition and reduced arbitrage opportunities, reported a 172% decline in segment adjusted EBITDA year-over-year, with a loss of $28 million. During an earnings conference call after markets closed Aug. 7, Chairman and CEO Greg Armstrong said the partnership could adjust its distribution policy to focus on fee-based cash flows, which in practice would result in a cut to distributions, but some analysts remained unsatisfied.

Since closing at $25.20 per share on Aug. 7, Plains stock has dropped nearly 19%, as of the Aug. 14 market close.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.