Standard and Poors Downgrades NuStar Issues

It has been brought to our attention by reader ‘D’ that S&P has downgraded virtually all equity and debt issues of NuStar Energy (NYSE:NS).

NS has 3 high yield preferreds outstanding as well as the baby bonds from NuStar Logistics.

The preferred issues which were rated B have been moved lower to B-. A B- is a really junky rating, but shares today did not seem to react (assuming they know of the downgrade).

The move to downgrade all the Nustar issues is based upon the amount of leverage the company is carrying (6.9x) for 2019. Fortunately S&P expects the leverage ratio to improve from this point forward.

If you have eTrade or Fido you can read the report on NuStar there–I can’t publish it here as they are vigilant on unauthorized reprinting.

All of the NuStar issues can be seen here.

We have updated our listings and individual security pages to reflect the most recent ratings changes.

12 thoughts on “Standard and Poors Downgrades NuStar Issues”

  1. How does one find the S&P report for NS on eTrade? I have an account there, but don’t see the report anywhere on their site.
    Thank you.
    Joe

    1. Jay – If you can’t find it on eTrade, why not go directly to standardandpoors.com? It’s free to register and you can read their reports as long as they’re current… If their credit reports are old, they don’t even allow you to read them from a free account, though you can get their ratings…. That makes Moody’s more of the go-to first rating agency imho, but in this case, naturally, if they just downgraded, the reportis there and easily accessible. I’ve not looked personally but I’m sure it’s there.

  2. Yikes. That is a lot of cash flow going into interest and dividends. Almost 450 million. If it was a larger cap, you could have some forgiveness. I thought i read an article years ago regarding stats on companies that have greater than a 7x leverage, and how they used bankruptcy to fix the mistakes on finances and restructure and move forward. They should just cut the dividend to help with payment of their projects.

  3. Tim and Co: Thanks for the diligence and notification system you apply here as a fine use of cyber-community, especially with all the activity, (read: gorging) in the markets lately. A network of shared intelligence is appreciated as it is difficult to keep up on everything! JA

  4. These updated ratings on NSS are still BETTER than the beloved ALLY-A, which many of us hold and continue to have few concerns over, beyond it being called. Just saying… Staying very long NSS.

  5. Might this imply a soft first quarter number to be released May 9???? Pure speculation.

    1. It is what it is. They are a debt monster. They are still running cash flow negative from buildout (that never seems to end). They have contracts and such for this, but as S&P says there is “execution risk”. And historically speaking they have had execution risk from over paying to a pitiful Asphalt business excursion, etc etc. They had a bond mature last year and paid it from revolver. The revolver is still engorged from this issue as they havent issued another needed bond to free up revolver. They keep waiting for better terms, but keep promising it will happen. Good news is S&P has no liquidity concerns yet.

      1. If I ran my own rating agency my “B” rating would be “skank”. NSS is now skank-.

        Continue to reduce my very oversized position despite the great yield.

        1. Egan Jones would disagree, Bob. They would issue a shank+, which in our real world, equates to their A+.

      2. Nu (effing) Star has been nothing but angst & wailing & gnashing of teeth for me. I owned the common in my MLP portfolio for years and it did nothing but disappoint. Over the past 2-3 years, I’ve winnowed out all those high-yield darlings that kept me awake nights. Sleeping much better now without the chimera of lofty yields that were supposed to support me in my dotage. lol

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