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Fitch places Tallgrass on Rating Watch Negative in wake of Blackstone buyout bid

Fitch Ratings placed Tallgrass Energy Partners LP on Rating Watch Negative after Blackstone Group Inc.'s infrastructure arm offered to buy the parent company's outstanding shares and take it private.

The agency said in a Sept. 3 note that the decision "reflects the potential for increased leverage associated with the take private offer," but added that the proposed transaction "could provide some meaningful credit benefits" such as financing growth projects and improving cash retention.

Tallgrass Energy Partners, the operating subsidiary of pipeline master limited partnership Tallgrass Energy LP, has corporate-level and senior unsecured credit ratings of BBB-, just one notch above junk territory.

Blackstone Infrastructure Partners, its partners and affiliates closed a roughly $3.2 billion acquisition of a 44% interest in Tallgrass and full membership interest in its general partner on March 11. They announced the buyout bid on Aug. 27 for $19.50 per common share.