Moody's cuts Western Refining

Moody's Investors Service said it downgraded Western Refining, Inc.'s corporate family and probability-of-default ratings to B3 from B1 and its senior secured amended term loan B to B3 (LGD3, 31%) from B1 (LGD3, 31%). The speculative grade liquidity rating remains SGL-4.

The outlook is negative. This concludes a review for downgrade begun on April 21, reflecting high leverage, weak operating performance and covenant compliance concerns.

Moody's said the downgrade reflects continuing very high leverage in the context of very weak first half 2008 refining margins overall and, in view of refining sector market indicators, expected only modest recovery in second half 2008.

The action also considers uncertainty about the issuer's ability to meet its third and fourth quarter financial covenants at a difficult time in the high yield debt markets, the agency said.

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