MUMBAI, Dec. 17, 2007 (Thomson Financial delivered by Newstex) -- Standard & Poor's (NYSE:MHP) Ratings Services said it has affirmed Citgo Petroleum Corp's ratings, including the 'BB' corporate credit rating, with a stable outlook after the Houston-based company proposed a 1 bln usd additional secured debt.
US-based Citgo will use the proceeds to fund a 1 bln usd intercompany loan to its Venezuealan parent, Petroleos de Venezuela SA (PDVSA).
'Although the increase in debt is clearly unfavourable for credit, CITGO's resulting leverage is within the low end of our range of expectations for the current rating,' said S&P.
Citgo's ratings reflect a satisfactory business risk profile and an aggressive financial risk profile, but are limited by the ratings on PDVSA. Citgo'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, S&P said.
The ratings agency also affirmed Citgo's 'BBB-' bank loan rating and '1' recovery rating and they indicate the expectation of very high recovery in the event of a payment default, it said.
S&P has a 'BB-' rating with a stable outlook on PDVSA.
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