Moody's lifts Tesoro outlook to positive

Moody's Investors Service said it affirmed Tesoro Corp.'s corporate family and probability-of-default ratings at Ba1, senior unsecured note rating at Ba1 (LGD4, 57%) and senior secured bank revolver rating at Baa1 (LGD2, 10%).

The outlook was changed to positive from stable.

These actions follow the company's announcement of $2.1 billion of acquisitions, including Shell Oil's very high complexity 100,000 barrels per day Wilmington, Calif., refinery, 250 of Shell's southern California retail sites and 140 retail sites in California, Nevada and the Southwest from private USA Petroleum. Tesoro plans to fund the acquisition with at least $700 million of its substantial cash on hand, with the remainder funded with a suitable mix of secured bank revolver debt and senior unsecured notes.

The agency said the change in outlook reflects the acquisitions' likely resolution of the main operating risk that has been restraining Tesoro's ratings - risk concentration in its refining portfolio - and the potential for an upgrade within 12 to 18 months.

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