S&P rates Renewable Energy notes BB

S&P said it assigned Renewable Energy Group Inc.’s planned $500 million of senior secured notes a BB rating with a 1(95%) recovery rating.

Concurrently, the agency assigned the company a B+ rating.

“REGI is exposed to significant commodity risks, given exposure to agriculture-based inputs that are uncorrelated to the renewable fuels that it produces. The heating oil – soybean oil (also known as HOBO) – spread is the benchmark for the company's forecasted gross margins. The company's inputs are mostly agricultural waste products like soybean oil, corn oil, and tallow (animal fats), but also include restaurant waste,” S&P said in a press release.

The outlook is stable, incorporating S&P’s view that the margin per gallon of biodiesel and renewable diesel will not materially change from the current levels over the next two years.

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