DBRS ups Chevron

DBRS said it upgraded the issuer rating of Chevron Corp. by one notch to AA from AA (low) with a stable trend. At the same time, DBRS discontinued the rating for Chevron’s senior unsecured notes and debentures; the decision to withdraw the rating of the senior unsecured notes and debentures was made at DBRS’ discretion and is unrelated to Chevron’s credit profile.

The drivers behind the ratings upgrade are the considerable improvement in the company’s credit profile since the oil-price crash in 2016 and expected further improvement over the next two to three years that supports an AA rating. In 2018, the company’s lease-adjusted debt-to-cash flow ratio improved to 1.19 times (x) from 2.09x the previous year. The lease-adjusted EBIT interest coverage ratio also improved to 17.22x in 2018 from 5.15x in 2017. The strengthening of the company’s credit metrics is attributable to the significant recovery in cash flow coupled with a reduction in the level of total indebtedness, DBRS said.

Overall debt (before operating leases) declined to $34.5 billion as at the end of 2018 and further to $32.9 billion at the end of Sept. 30, from $46.1 billion at the end of 2016. Chevron reduced debt as a result of a sizable free cash flow (FCF) surplus (cash flow after capital expenditures (capex) and dividends) in 2018 and year-to-date 2019 combined with proceeds from asset sales. The company is also deploying FCF surpluses to fund common share repurchases.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.