Fitch rates Valero bonds BBB

Fitch Ratings said it assigned a BBB rating to Valero Energy Corp.'s remarketing of $300 million of gulf opportunity zone revenue bonds, which were issued in 2010 but subsequently repurchased by Valero and held in Treasury since February of last year.

The bonds were originally issued to finance a hydrocracker expansion at Valero's 270,000 bpd St. Charles, LA refinery. The bonds are subject to a mandatory tender for purchase on June 1, 2022 at par.

Valero has an issuer default rating of BBB, unsecured credit facility rating of BBB and senior unsecured debt rating of BBB, the agency said.

The ratings are supported by the size, scale and the geographic diversity of its refineries, Fitch said, along with its leverage to heavy and sour crude oil economics, Fitch said.

The ratings also consider its modest, but growing access to discounted light sweet shale crudes and ample levels of current financial flexibility, the agency said.

Ratings concerns stem from lingering challenges that face North American refiners, including an elevated U.S. unemployment rate and high oil prices, Fitch said, and structural pressures on U.S. fuels consumption.

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