TEXT - S&P rates Targa Resources notes 'BB'

Overview
-- U.S. midstream energy limited partnership Targa Resources Partners is
issuing $400 million of senior unsecured notes due 2023. Targa plans to use
net proceeds to redeem its 2016 notes, repay revolving credit facility
borrowings, and for general corporate purposes.
-- We are assigning our 'BB' issue rating and '4' recovery rating to the
notes.
-- The stable outlook reflects our view that Targa will maintain
consolidated leverage below 4x and adequate liquidity while executing its 2013
organic expansion.

Rating Action
Oct 22 - Standard & Poor's Ratings Services assigned its 'BB' issue-level rating
and '4' recovery rating to Targa Resources Partners L.P.'s and Targa Resources
Partners Finance Corp.'s proposed $400 million senior unsecured notes due 2023.
The '4' recovery rating
indicates our expectation of average (30% to 50%) recovery if a payment
default occurs.

The partnership intends to use net proceeds to redeem its 2016 unsecured
notes, reduce borrowings under its secured revolving credit facility, and for
general corporate purposes, which may include redeeming or repurchasing some
of its other outstanding notes, working capital, and funding acquisitions. Pro
forma for the notes offering, Targa has total balance-sheet debt of about $1.6
billion.

Rationale
The rating on Houston-based Targa Resources Partners reflects a "fair"
business risk profile and "significant" financial risk profile. Key factors
for the business risk include cash flows that are largely vulnerable to
volatile commodity prices and volume risk, limited asset diversity, and the
master limited partnership (MLP) structure, under which the partnership
distributes virtually all cash flow. Targa's growing geographic diversity and
fee-based cash flows, low financial leverage, and solid liquidity partly
mitigate these risks.

Under our 2013 base-case forecast, we assume 10% growth in field gathering and
processing volumes, a 5% decline in coastal gathering and processing volumes,
and modest growth in marketing and distribution and logistics segment EBITDA.
Our forecast incorporates our price assumptions for West Texas Intermediate
(WTI) crude oil of $80 per barrel, Henry Hub natural gas prices of $3.00 per
million Btu, and a composite natural gas liquids (NGL) price of 96 cents per
gallon. We have not assumed any additional equity issuance in our forecast.
Based on these assumptions, we believe Targa will achieve EBITDA between $580
and $590 million, including our adjustments. We expect debt to EBITDA to be
between 3.75x and 3.9x. We believe financial leverage could improve to about
3.5x if Targa funds its 2013 capital spending with a balance of debt and
equity.

We have also assumed distributable cash flow coverage of about 1.1x for 2013,
based on 10% distribution growth. In our opinion, this projected coverage
ratio provides limited cushion to distributable cash flow if commodity prices
fall sharply.

Targa's consistent hedging policy supports its credit profile. The partnership
hedges the commodity risk of expected natural gas, NGL, and condensate equity
volumes with a combination of swaps and purchased puts that are rolled through
2015. Management stated that it has hedged 60% of natural gas and 80% of its
NGL equity volumes for 2012 and between 45% and 55% of natural gas, NGL, and
condensate volumes for 2013, which should provide some cash flow certainty, in
our view. Targa's gathering and processing contract mix is about 40%
percentage-of-proceeds/percentage-of-liquids, 21% keep-whole, 36% hybrid, and
3% fee-based. Fee-based cash flows accounted for about 40% of total EBITDA
when including Targa's downstream business segment.

Targa's field gathering and processing segment is the primary contributor to
cash flows, accounting for about 40% of total operating margin. The
partnership's gathering systems access the Barnett Shale in North Texas and
the Permian Basin and Wolfberry Trend in West Texas. We believe volumes in
North Texas and certain parts of the Permian Basin will be higher in 2013
because of producers' focus on the oil- and liquids-rich areas of these plays.

In our view, Targa's coastal straddle plants carry more risk than the field
segment, because of the potential for cash flow volatility from its largely
hybrid and keep-whole contract mix. Although the partnership hedges some of
its field gathering and processing margins, the keep-whole volumes aren't
hedged. However, its mostly industrial customer base can burn gas with a
higher Btu content when these contracts are uneconomic, which partly mitigates
keep-whole risk. We believe the coastal segment's volumes will decline
slightly in 2013. Nevertheless, we expect the strong processing environment
(i.e., the higher price of NGLs relative to the price of natural gas).

Cash flow from the downstream business (the logistics and marketing and
distribution segments) is generally fee-based, which mitigates the effect of
changes in petrochemical demand and NGL prices. These assets are connected to
important hubs such as Mont Belvieu--including the Galena Park marine
terminal, near Houston--and Lake Charles, La., where Targa manages its equity
and third-party volumes. The NGL logistics and marketing division is a fully
integrated system that can fractionate, store, and distribute NGLs under
fee-based and margin-based contracts.

Liquidity
We consider Targa's liquidity to be "adequate" under our corporate criteria.
We estimate the partnership's sources of liquidity will exceed uses by about
1.4x in the next 12 months pro forma for the notes offering. Sources of
liquidity include FFO of $450 million and $1.1 billion available under the
revolving credit facility that matures in 2015. Key uses include capital
spending (growth and maintenance) of $760 million and distributions of about
$350 million.

Targa has no near-term maturities. In addition, the partnership's hedges have
no collateral posting requirements, because counterparties' mark-to-market
exposure is secured pari passu with the bank debt.

We expect Targa to remain in compliance with its bank covenants in 2013, which
include a minimum EBITDA interest coverage of 2.25x, maximum total leverage of
5.5x, and maximum senior leverage of 4x. As of June 30, 2012, Targa has a
significant EBITDA cushion of 47% under its total debt to EBITDA leverage test
before it would breach that covenant.

Recovery analysis
The rating on Targa's senior unsecured debt is 'BB' (the same as the corporate
credit rating), and the recovery rating is '4', indicating our expectation
that lenders would receive average (30% to 50%) recovery if a payment default
occurs.

Outlook
The stable outlook on the ratings reflects our view that Targa will maintain
consolidated leverage below 4x and adequate liquidity while executing its 2013
organic expansion. Higher ratings are unlikely in the next 12 to 18 months,
but are possible over time if Targa expands its geographic reach into new
resource plays, diversifies its business mix, meaningfully increases its
fee-based cash flows, and keeps financial leverage in the low-3x area. We
could lower the rating if lower commodity prices or a decrease in volumes
cause EBITDA to decline and financial ratios to deteriorate, such that total
debt to EBITDA is more than 4.75x for a sustained period.

Related Criteria And Research
-- Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012
-- Standard & Poor's Revises Its Natural Gas Liquids Price Assumptions
For 2012, 2013, And 2014, June 11, 2012
-- Key Credit Factors: Criteria For Rating The Global Midstream Energy
Industry, April 18, 2012
-- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011

Ratings List

Targa Resources Partners L.P.
Corrporate credit rating BB/Stable/--

New Ratings
Targa Resources Partners L.P.
Targa Resources Partners Finance Corp.
$400 mil senior unsecured notes BB
Recovery rating 4