Fitch cuts Cenovus Energy

Fitch Ratings said it downgraded Cenovus Energy Inc.’s long-term issuer default rating to BB+ from BBB- and senior unsecured rating to BB+/RR4 from BBB-. The outlook is negative.

The downgrades reflect the effect of sharply lower oil prices on the company’s leverage metrics, which led Fitch to revise its price deck lower. Cenovus’ debt/EBITDA leverage metrics now look weak for the rating category under Fitch’s revised price deck, particularly in 2020 and 2021.

The downgrades also reflect the higher variance of Cenovus’ forecast debt/EBITDA leverage in the downcycle when compared to most investment-grade exploration and production, despite the progress the company has made to date in reducing balance sheet debt and taking fixed costs out of its system, the agency said.

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