S&P cuts Sunoco outlook to negative

Standard & Poor's said it lowered its outlook on Sunoco Inc. to BBB/negative/A-3 from BBB/stable/A-2.

The negative outlook reflects its concerns that refining margins will remain weak in 2009 and possibly well beyond, the agency said.

Furthermore, S&P said that Sunoco's limited ability to process disadvantaged crudes, its geographic concentration in the highly competitive PADD I region, and its significant near-term regulatory and required capital expenditures place the company at a relative disadvantage.

Only partially offsetting these concerns are the company's growing and more stable coke and logistics business units, as well as its moderate debt, the agency added.

The agency said that liquidity concerns and its expectations that industry conditions could remain weak for 2009 and possibly beyond were key factors behind the rating actions, adding that it expects margins to remain thin and product demand weak.

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