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December 18, 2007 |
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CITGO PETROLEUM: S&P Affirms BB Corporate Credit Rating Standard & Poor's Ratings Services has affirmed its ratings, including the 'BB' corporate credit rating, and its senior secured and recovery ratings, on CITGO Petroleum Corp., after the company proposed US$1 billion in unrated, additional secured debt, to be ranked pari passu with its existing credit facility. The outlook on the company is stable. The company had US$1.3 billion of funded debt as of Sept. 30, 2007. The company will use proceeds from the US$1 billion first-lien financing to fund a US$1 billion intercompany loan to its parent, Petroleos de Venezuela S.A. (PDVSA; foreign currency BB-/Stable/--). "Although the increase in debt is clearly unfavorable for credit, CITGO's resulting leverage is within the low end of our range of expectations for the current rating," said S&P's credit analyst Ben Tsocanos. The first-lien facilities currently consist of a US$1.15 billion term revolving credit facility and a US$700 million term loan. The 'BBB-' bank loan rating and recovery rating of '1' indicate the expectation of very high (90%-100%) recovery in the event of a payment default. The ratings on CITGO Petroleum reflect a satisfactory business risk profile and an aggressive financial risk profile, but are limited by the ratings on Petroleos de Venezuela. The company's credit strength as a stand-alone entity is based on the scale and complexity of its refining operations, which have net crude processing capacity of 750,000 barrels per day through three fuel refineries, placing it among the largest refiners in the United States. The company gains substantial competitive advantage from its ability to process large volumes of heavy sour crude oils -- which trade at sharp discounts to better- quality crude oil -- into high-margin products, and from its relatively large refineries, which give it economies of scale. Headquartered in Houston, Texas, Citgo Petroleum Corp. -- http://www.citgo.com/ -- is owned by PDV America, an indirect, wholly owned subsidiary of Petroleos de Venezuela SA, the state- owned oil company of Venezuela. Petroleos de Venezuela is Venezuela's state oil company in charge of the development of the petroleum, petrochemical, and coal industry, as well as planning, coordinating, supervising, and controlling the operational activities of its divisions, both in Venezuela and abroad. |
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