Moody's affirms Hovensa

Moody's Investors Service said it affirmed Hovensa LLC's Ba2 corporate family rating and the Ba2 rating on its tax-exempt bonds in response to the joint venture's announcement that it will shut down its refinery in St. Croix by mid-February.

The site will continue to operate as an oil products terminal, Moody's said.

Hovensa's refinery is one of the largest in the Atlantic Basin and Western Hemisphere, running a large supply of lower cost heavy crude from Venezuela.

Still, high market inventory levels, narrow light/heavy crude differentials and high fuel costs at the refinery forced the owners to make this shutdown decision, the agency said.

While shuttering and severance costs will be an upfront burden, the owners ultimately will cut losses and benefit from stronger liquidity and improved returns, Moody's said.

The agency said it believes a strong crude and product price outlook will support Hovensa's inventory values and ability to make timely payoff on the bonds.

Moody's also said it does not expect the shutdown to affect Hess Corp.'s Baa2 long-term debt rating and stable outlook.

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