Tesoro Logistics 'BB' Corp. Credit Rtg Affirmed On Acquisition; $1.3 Billion Notes Rated 'BB' (Recovery Rtg: '4')

U.S. midstream energy master limited partnership Tesoro Logistics L.P. has agreed to acquire QEP Field Services (QEPFS), a natural gas gathering and processing company and wholly owned subsidiary of QEP Resources Inc., for about $2.5 billion. The acquisition includes QEPFS' full general and 56% limited partnership interest in QEP Midstream Partners L.P. Tesoro Logistics intends to issue $1.3 billion of senior unsecured notes in two tranches, due 2019 and 2022, to partly fund the transaction. We are affirming Tesoro Logistics' corporate credit and senior unsecured debt ratings of 'BB' and maintaining the stable outlook. At the same time, we are assigning a 'BB' issue-level rating and '4' recovery rating to the notes. The acquisition brings greater scale and diversity, but

...+ U.S. midstream energy master limited partnership Tesoro Logistics L.P. has agreed to acquire QEP Field Services (QEPFS), a natural gas gathering and processing company and wholly owned subsidiary of QEP Resources Inc., for about $2.5 billion. The acquisition includes QEPFS' full general and 56% limited partnership interest in QEP Midstream Partners L.P. + Tesoro Logistics intends to issue $1.3 billion of senior unsecured notes in two tranches, due 2019 and 2022, to partly fund the transaction. + We are affirming Tesoro Logistics' corporate credit and senior unsecured debt ratings of '##' and maintaining the stable outlook. At the same time, we are assigning a '##' issue-level rating and '4' recovery rating to the notes. The acquisition brings greater scale and diversity, but also creates incrementally higher financial leverage. + The stable outlook reflects our expectation that Tesoro Logistics will successfully integrate QEPFS' gathering, processing, and fractionation business, while...

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