New York, December 04, 2012 -- Moody's Investors Service assigned a Ba3 rating to Targa Resources Partners LP's (Targa) tack-on offering of $200 million senior unsecured notes due 2023. The proceeds from the new senior notes will be used to finance a portion of the $950 million acquisition of the Williston Basin midstream assets of Saddle Butte Pipeline LLC announced on November 15, 2012. The remainder of the acquisition will be financed using the $380 million of proceeds from Targa's recent equity offering and approximately $390 million of borrowings under the partnership's senior secured revolving credit facility. Targa's other ratings are unchanged and the outlook remains stable.

"The Saddle Butte acquisition diversifies Targa's asset base and contributes a new fee-based revenue stream," said Stuart Miller, Moody's Vice President and Senior Credit Officer. "However, the high multiple of trailing EBITDA being paid and the significant capital expenditures required in 2013 to build out the system have added a degree of vulnerability to Targa's existing credit rating."

Issuer: Targa Resources Partners LP

....US$250M 11.25% Senior Unsecured Regular Bond/Debenture

....US$250M 7.875% Senior Unsecured Regular Bond/Debenture

....US$325M 6.875% Senior Unsecured Regular Bond/Debenture

....US$400M 6.375% Senior Unsecured Regular Bond/Debenture

....US$400M 5.25% Senior Unsecured Regular Bond/Debenture

..Assignments:

....US$200M Senior Unsecured Regular Bond/Debenture, Assigned Ba3, LGD5 - 70 %

RATINGS RATIONALE

As a result of the Saddle Butte acquisition, Targa will move from strongly positioned within its a Ba2 Corporate Family Rating (CFR) to being weakly positioned. The October 2012 note offering that was used to fund its base business along with the debt incurred to purchase the Saddle Butte operations are expected to push Targa's leverage from 3.1x at September 30, 2012 to 4.3x by the end of 2012 (with Moody's standard adjustments). This is a level that is considered to be high for a Ba2 CFR given Targa's modest scale and exposure to commodity prices.

In addition, we are expecting Targa to significantly outspend free cash flow in 2013. Moody's projects that Targa will generate roughly $450 million of cash flow from operations in 2013 compared to over $400 million of unit holder distributions and about $900 million of planned capital expenditures pro forma for the Saddle Butte acquisition. The $850 million shortfall exceeds the $700 million of pro forma availability Targa has under its $1.2 billion revolving credit facility -- therefore we anticipate additional capital markets activity in 2013.

The Ba2 CFR also incorporates Moody's expectation that Targa will have a weak distribution coverage ratio of less than 1.0x at least through the middle of 2013 when a number of growth projects begin to generate cash flow. Prior to the Saddle Butte acquisition, the partnership's relatively low leverage was an offset to this aggressive level of distributions. The higher leverage in combination with a weak distribution coverage ratio and an expectation for negative free cash flow puts Targa's rating in a precarious position. That being said, Moody's maintains a stable outlook which is predicated on Moody's belief that Targa will be able to manage through this period of elevated leverage. The Saddle Butte acquisition is viewed as a credit enhancing asset that adds diversification and additional fee-based revenues to Targa's portfolio of assets. By 2014, it is possible that the cash flow from the Saddle Butte acquisition will enable Targa to reduce its exposure to commodity price-linked businesses to less than 40%.

To satisfy its short term liquidity needs, Targa relies on its $1.2 billion senior secured revolving credit facility. The credit facility matures in October 2017. Availability after the Saddle Butte acquisition and the tack-on senior notes will be approximately $700 million, an amount that is not sufficient to support the projected out-spending of internally generated cash flow in 2013. As a result, we expect Targa to issue additional debt or equity in 2013 to plug the shortfall. The credit facility incorporates the following financial covenants: a maximum leverage ratio of 5.5x, a maximum senior leverage ratio of less than 4.0x, and a minimum interest coverage ratio of 2.25x. These covenant levels allow for a significant degradation in financial performance before they would be triggered.

To be considered for an upgrade, Targa would need to show a meaningful improvement in the proportion of its operating income being generated from fee-based arrangements, maintain leverage below 3.5x, and improve the distribution coverage ratio to at least 1.1x. Alternatively, a negative rating action could be taken if leverage is not reduced below 4.0x by the end of 2013.

The principal methodology used in rating Targa Resource Partners LP was the Global Midstream Energy rating methodology published in November 2010. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found on Moody's website.

Targa Resource Partners LP is a mid-sized midstream master limited partnership headquartered in Houston, Texas.

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Stuart Miller VP - Senior Credit Officer Corporate Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Steven Wood MD - Corporate Finance Corporate Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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