S&P lowers Sunoco to BB-

S&P said it lowered its corporate credit rating on Sunoco LP to BB- from BB.

The outlook is negative.

At the same time, the agency reviewed the recovery ratings on Sunoco that were labeled under criteria review after publishing the revised recovery criteria on Dec. 7. With its review complete, S&P removed the UCO designation from these ratings.

S&P lowered the issue-level rating on the partnership's senior unsecured debt to B+ from BB- and left the recovery rating of 5 unchanged. The 5 recovery rating reflects an expectation of modest (10%-30%; upper half of the range) recovery in the event of a payment default.

The agency also affirmed the senior secured issue rating of BB and revised the recovery rating to 2 from 3. The 2 recovery rating reflects our expectation of substantial (70%-90%; lower half of the range) recovery in the event of a default.

"The negative outlook reflects our belief that Sunoco's credit metrics will remained pressured, with debt to EBITDA in the 5.75x to 6x range," S&P credit analyst William Grande said in a news release.

"The outlook also reflects the partnership's high cost of equity capital, limited cushion under financial covenants, and the risk of margin compression at its retail and wholesale business segments."

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