S&P cuts CVR, units

S&P said it lowered CVR Energy and CVR Refining LP to B+ from BB- and CVR Partners LP to B from B+. “Given our view of CVR Partners’ relevance to CVR Energy, we do not equalize the rating on CVR Partners with that on CVR Energy,” S&P said in a press release.

“The refining industry did not recover in the second half, and we now expect a slow path to pre-COVID-19 demand and refining margins,” S&P said.

With refining margins more than 50% weaker than in 2018 and 2019, S&P said it forecasts negative EBITDA in the refining segment for 2020 and a slow path to recovery to pre-pandemic figures.

“CVR Refining, the refining business of CVR Energy, generated more than $700 million EBITDA in 2018 and 2019, and is likely to post negative EBITDA in 2020 (through Sept. 30, it was negative $8 million). Given it is the largest cash flow contributor to the group (CVR Partners’ EBITDA was $84 million in 2018 and $107 million in 2019), we expect the group’s credit metrics to remain depressed at least through the second half of 2021,” the agency said.

The outlook is negative.

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