Moody’s drops Petro-Canada to Baa1

Moody's Investors Service said it downgraded Petro-Canada Ltd.'s senior unsecured rating to Baa1 from A3 and assigned a stable outlook.

The debt of Petro-Canada is guaranteed by Suncor Energy Inc. (Baa1 stable) and its senior unsecured rating is equivalent to the senior unsecured rating of Suncor.

This action resolves the reviews for downgrade that was initiated on Dec. 16.

Petro-Canada's Baa1 senior unsecured rating is based on a guarantee from Suncor, Moody’s said. Suncor's Baa1 senior unsecured rating reflects its long-lived oil-only production of about 650,000 bbls/day pro forma for the acquisition of Canadian Oil Sands Ltd., integrated downstream refinery operations that act as a cash flow mitigant to the volatility in the upstream business and financial flexibility still available in its divisible assets and in its large dividend should low oil prices persist.

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