Moody's may upgrade Valero Energy

Moody's Investors Service said it placed Valero Energy Corp.'s ratings on review for upgrade. The outlook had been positive.

The agency said the review reflects conservative leverage at the end of 2007, providing room to absorb a degree of expected higher leverage this year; management's statements to Moody's on the timing, scale and use of proceeds from potential asset sales as the company evaluates its strategic alternatives, which include assessing opportunities to divest refineries to optimize its asset base; potential ranges of resulting 2008 leverage; ample back-up liquidity; and its pro forma solid position as a large, geographically diversified independent refiner with an investment-grade business profile.

Timing stock buyback activity to coincide with potential asset sale proceeds will be a key aspect of Valero's ability to improve its current ratings, Moody's said.

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