Research Update: EQM Midstream Partners L.P. Rating Lowered Following Counterparty Downgrade; Outlook Negative

Pittsburgh-based midstream partnership EQM Midstream Partners L.P.'s counterparty credit quality has deteriorated due to its largest counterparty EQT's downgrade to 'BB+/Negative'. Additionally, EQM's leverage metrics and distribution coverage remain pressured due to the delay in the Mountain Valley Pipeline project. As a result, we are lowering our issuer credit rating to 'BB+' from 'BBB-'. At the same time we are lowering our issue-level ratings on the partnership's unsecured debt to 'BB+' from 'BBB-' and assigning a '3' recovery rating, based on our expectation for meaningful recovery (50%-70%; rounded estimate: 60%) recovery in a payment default scenario. The negative outlook reflects the uncertainty around both the timing and costs of the Mountain Valley Pipeline's completion and the impact of contract renegotiations

...+ Pittsburgh-based midstream partnership EQM Midstream Partners L.P.'s counterparty credit quality has deteriorated due to its largest counterparty EQT's downgrade to '##+/Negative'. + Additionally, EQM's leverage metrics and distribution coverage remain pressured due to the delay in the Mountain Valley Pipeline project. + As a result, we are lowering our issuer credit rating to '##+' from '###-'. + At the same time we are lowering our issue-level ratings on the partnership's unsecured debt to '##+' from '###-' and assigning a '3' recovery rating, based on our expectation for meaningful recovery (50%-70%; rounded estimate: 60%) recovery in a payment default scenario. + The negative outlook reflects the uncertainty around both the timing and costs of the Mountain Valley Pipeline's completion and the impact of contract renegotiations with EQT. We expect leverage to remain above 5x in 2020....

Research Update