S&P affirms Holly

Standard & Poor's said it affirmed the BB corporate credit and senior unsecured ratings on Holly Corp.

The outlook remains stable.

The actions follow Holly Corp.'s announcement that it will acquire Sinclair Oil Corp.'s refinery in Tulsa, Okla., for roughly $129 million plus costs to acquire related inventory, according to the agency.

"We expect the transaction to be funded so that Holly maintains above-average financial measures for its rating, such as debt leverage below 3x at current weak margins," S&P analyst Paul B. Harvey said in a statement.

S&P said the Sinclair acquisition will benefit Holly by allowing it to avoid about $125 million of near-term capital spending for regulatory requirements at the recently acquired Sunoco plant.

The benefits to credit quality are tempered by still elevated capital spending, both regulatory and growth, over the next 12 to 18 months during a period of weak and uncertain margins, the agency said.

Ratings reflect the challenges as a small, independent oil refiner with limited cash flow diversification, the agency said.

High near-term spending to meet environmental regulations, benzene and ULSD, as well as construction of the Salt Lake City to Las Vegas pipeline tempers otherwise above-average near-term financial measures, S&P said.

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