Fitch rates Tesoro notes BB+

Fitch Ratings said it assigned a BB+ rating to Tesoro Corp.'s $300 million of 9.75% senior unsecured notes due 2019. The issuer default rating is BB+.

The outlook is negative.

Proceeds will be used for general corporate purposes, including the repayment or refinancing of indebtedness, capital expenditures and working capital.

Tesoro's ratings are supported by the scale and diversification of its portfolio of seven refineries, its solid long-term competitive position, recent upgrades across Tesoro's system and reasonable year-to-date benchmark crack spreads for the West Coast, the agency said.

Offsetting factors include significant future mandatory capital spending requirements, unknown length and severity of trough conditions affecting the downstream, exposure to the underperforming California economy, acquisition risk and the potential impact of future environmental legislation, the agency noted.

Debt-to-EBITDA leverage at March 31 was 1.3x.

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