Moody’s upgrades Cenovus

Moody’s Investors Service said it upgraded Cenovus Energy Inc.’s senior unsecured rating to Baa3 from Ba2. The agency changed the outlook to negative from under review. This action concludes the review that was initiated on Oct. 26. Moody’s withdrew Cenovus’ previous Ba2, Ba2-PD and SGL-2 ratings.

Cenovus completed its acquisition of Husky Energy Inc. Cenovus will become the obligor under Husky’s senior unsecured notes. Husky debt will rank equally with Cenovus’ debt.

“The upgrade to Baa3 reflects the significant increase in size, scale and downstream capabilities following the close of Cenovus’ merger with Husky Energy,” said Paresh Chari, a Moody’s analyst, in a press release.

“We also expect Cenovus’ conservative financial policies to be maintained, leading to significant debt reduction over the near term, improving the weak leverage, ” Chari added.

The outlook reflects the uncertainty around successfully combining the assets and the pace of deleveraging through 2022, Moody’s said.

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