Fitch: Tesoro outlook negative

Fitch Ratings said it affirmed Tesoro Corp.'s issuer default and senior unsecured debt ratings at BB+ and revised the outlook to negative.

Ratings are supported by the scale and diversification benefits of the company's portfolio of seven refineries, its solid long-term competitive position and recent declines in crude oil and gasoline prices, the agency said.

Offsetting factors include eroding refining fundamentals and weak cash generation, high pending capital spending requirements, higher liquidity requirements driven by an historically expensive oil complex and Tesoro's exposure to the California gasoline market, Fitch said.

For the 12 months ending June 30, the issuer's debt-to-EBITDA ratio rose to 5.2 times from 1.2 times.

The agency noted the erosion of metrics is largely linked to a dramatic drop off in EBITDA rather than increases in Tesoro's debt.

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