Ultramar Diamond Shamrock Corporation — Moody's announces completion of a periodic review of ratings of Valero Energy Corporation
Announcement of Periodic Review: Moody’s announces completion of a periodic review of ratings of Valero Energy Corporation
Global Credit Research – 10 Aug 2020
New York, August 10, 2020 — Moody’s Investors Service (“Moody’s”) has completed a periodic review of the ratings of Valero Energy Corporation and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody’s reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since 1 January 2019, Moody’s practice has been to issue a press release following each periodic review to announce its completion.
This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
Key rating considerations are summarized below.
Valero Energy Corporation’s (VLO) Baa2 rating is supported by strong liquidity despite the sharp decline in demand for refined products in the first half of 2020. The company has large operating scale, high process complexity, and significant refined product export opportunities that allow for optionality in feedstocks and product slates. Additionally, the company has access to a wide selection of markets. The company’s credit profile is supported by the expectation of free cash flow generation through the refining cycle, as well as strong operating execution by its management team. Compared to its US peers with large downstream assets, Valero Energy Corporation has higher earnings volatility, which restrain its credit profile, along with management’s focus on high shareholder returns.
This document summarizes Moody’s view as of the publication date and will not be updated until the next periodic review announcement, which will incorporate material changes in credit circumstances (if any) during the intervening period.
The principal methodology used for this review was Refining and Marketing Industry published in November 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
This announcement applies only to EU rated and EU endorsed ratings. Non EU rated and non EU endorsed ratings may be referenced above to the extent necessary, if they are part of the same analytical unit.
This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
Elena Nadtotchi VP - Senior Credit Officer Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Steven Wood MD - Corporate Finance Corporate Finance Group JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653
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