S&P affirms Western Refining

Standard & Poor's said it affirmed Western Refining Inc.'s B+ long-term corporate credit rating and BB- senior secured debt rating.

The agency assigned a BB- rating to Western's proposed $600 million senior secured notes due 2017 with 2 recovery rating and a B- rating to its proposed $100 million convertible senior notes due 2014 with 6 recovery rating.

The outlook remains negative.

Proceeds from the proposed debt offerings, as well as a common equity offering of 14 million shares, will be used to refinance debt. Western seeks to provide itself with greater financial flexibility through lower debt leverage and more favorable financial covenants.

Western's trailing-12-month adjusted debt-to-EBITDA leverage ratio was about 2.8x as of March 31.

Ratings reflect the company's high debt leverage in an industry beset by extreme operating margin volatility, S&P analyst Paul B. Harvey said in a statement.

Ratings also reflect moderate asset diversification, niche Southwestern markets where margins are generally more favorable and improved operational abilities of the refineries, the agency noted.

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