Moody's affirms Tesoro

Moody's Investors Service said it affirmed Tesoro Corp.'s Ba1 corporate family rating, Ba1 probability of default rating and Ba1 (LGD 4, 60%) senior unsecured note ratings.

Under Moody's loss given default methodology, the rating on Tesoro's senior secured bank revolver is moved from Baa1 (LGD 1, 8%) to Baa2 (LGD2, 12%), the agency said, noting that the revolver rating change is due to a proportionately very large increase in accounts payable that is likely to persist due to far higher crude oil prices and the resulting far higher monthly crude oil purchasing costs and investment in inventory.

Moody's said it also moved the outlook to stable from developing.

On Oct. 26, Tesoro's outlook was moved to developing from positive upon Tracinda Corp.'s announcement of a cash tender offer for large minority Tesoro's common stock, the agency added, noting that at the time, the range of possible tactical and strategic moves by Tesoro and Tracinda warranted the change in outlook.

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