Moody's rates Petrotrin note Baa2

Moody's Investors Services said it assigned a Baa2 foreign-currency rating to Petroleum Co. of Trinidad & Tobago Ltd.'s (Petrotrin) proposed $750 million senior unsecured notes and affirmed the company's Baa2 foreign-currency issuer rating and Baa2 global local-currency rating.

The outlook is stable.

Proceeds from the notes will be used to fund Petrotrin's $800 million refinery upgrade program.

The agency said the company's gasoline optimization project, which is expected to be completed in February 2009, should allow for an improved product mix, with improved gasoline and lighter distillates yields and increased compliance with certain environmental specifications, greater reliability and, over the longer term, lower refining unit costs.

In Moody's view, the upgrade program, as well as Petrotrin's $150 million low sulfur diesel project and $185 million gas-to-liquids project, are key to the company's ability to meet increasingly stringent fuel specifications and confront rising regional competition because the company's refining margins will likely be pressured from the elimination of regional tariffs, planned regional capacity expansions and the implementation of the PetroCaribe initiative. The company also faces inherent project delay, completion and post-completion performance risk, and some of its capital projects remain exposed to cost escalation risk until all raw material costs, labor costs and construction terms are finalized.

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