CITGO Petroleum Corp.'s Senior Secured Term Loan Rated 'B+' (Recovery Rating: '1'); Ratings Remain On Watch Dev
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TORONTO (S&P Global Ratings) March 29, 2019--S&P Global Ratings said today it
assigned its 'B+' issue-level rating and '1' recovery rating to U.S.-based
refinery and petroleum product marketer and distributor CITGO Petroleum Corp.'s
$1.2 billion senior secured term loan due in 2024. At the same time, S&P
Global Ratings placed the rating on CreditWatch with developing implications.
The company plans to use the proceeds from the financing to provide liquidity
for ongoing business needs. In addition, the company plans to terminate its
revolving credit facility and AR securitization facility.
Our issuer credit ratings on CITGO Petroleum and parent CITGO Holding Inc.,
and the issue ratings on their debt, are unchanged and remain on CreditWatch
with developing implications, where they were placed Dec. 7, 2017.
The 'B+' issue-level rating and the '1' recovery rating on the term loan due
in 2024 reflect the potential for very high (90%-100%; rounded estimate: 95%)
recovery prospects in a default. The company plans to use the proceeds from
the financing to provide liquidity for ongoing business needs. Furthermore,
the company plans to terminate its $900 million revolving credit facility due
in 2019 and $320 million AR securitization facility due in 2019. In our view,
the company's liquidity position will remain adequate to fund its needs as the
term loan issuance will provide almost $1.2 billion in excess cash that will
sufficiently offset the absence of a revolving credit facility and receivables
securitization facility.
