Fitch upgrades Sunoco, rates notes

Fitch Ratings said it upgraded Sunoco, LP's (SUN) long-term issuer default rating to BB from BB-, senior secured rating to BB+/RR1 from BB/RR1 and senior unsecured rating to BB/RR4 from BB-/RR4.

The agency also upgraded Sunoco Finance Corp.’s senior unsecured rating to BB/RR4 from BB-/RR4.

The outlook is stable.

In addition, Fitch rated Sunoco's proposed offering of senior unsecured notes BB/RR4. The notes are being co-issued with Sunoco Finance.

Proceeds, combined with proceeds from the sale of the majority of Sunoco’s convenience stores to 7-Eleven, Inc., which is expected to close this month, are expected to be used to fund the redemptions of Sunoco’s existing senior unsecured notes due 2020, 2021 and 2023 and to repay its term loan A and a portion of its secured revolving credit facility.

“The upgrade reflects the fact that with the sale of most of SUN's convenience store business and the planned reduction in leverage the company's credit profile will be materially improved,” the agency said in a news release.

“Additionally, Fitch believes that the wholesale fuel business, supported in part by a long-term (15 year) fixed rate contract with 7-Eleven, should generate fairly consistent earnings and cash flows for SUN.”

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