OREANDA-NEWS. S&P Global Ratings today said it assigned its 'BB-' issue-level rating and '4' recovery rating to Parkland Fuel Corp.'s C$300 million 5.75% senior unsecured notes due 2024. The '4' recovery rating reflects our expectation for average (30%-50%; high end of range) recovery in the event of default. The new debt will be held in escrow until Parkland completes the acquisition of its portion of CST Brands Inc.'s Canadian assets, likely in late 2016 or early 2017.

Our 'BB-' long-term corporate credit rating and stable outlook on Parkland are unchanged along with our 'BB-' issue-level rating and '3' recovery rating on the company's unsecured debt outstanding. That said, we will likely lower our recovery ratings on Parkland's existing unsecured debt to '4' from '3' if the company finances the acquisition as proposed, because we believe the addition of more than C$500 million of secured debt from a new C$700 million revolving credit facility would weaken noteholders' prospects for recovery in the event of default.

The transaction funding is proceeding in line with our expectations, with the company having completed a bought deal for C$230 million of equity, along with these new notes and a new, fully underwritten secured credit facility.