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Announcement of Periodic Review: Moody's announces completion of a periodic review of ratings of CVR Energy Inc.
Global Credit Research - 10 Aug 2020
New York, August 10, 2020 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of CVR Energy Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since 1 January 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion.
This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
Key rating considerations are summarized below.
CVR Energy Inc's (CVI's) Ba3 Corporate Family Rating (CFR) reflects the solid credit profile of its refining operations that contributes around 85% of its consolidated EBITDA as of March 31, 2020. The positive diversification attributed from CVR Partners' (CVRP) nitrogen fertilizer operations is offset by the high leverage carried by CVRP (B2). Given the volatile nature of both the refining and nitrogen fertilizer businesses, CVI's EBITDA can be volatile and lead to swings in its leverage metrics. Following the placement of the new notes accompanied by inherent volatility in spreads, we expect leverage to increase in 2020 and improve in 2021. We also expect CVI to cut its capital expenditures for 2020 and support solid operating cash flow generation at the refining facilities. CVI's shareholder friendly financial policy, as evident in its high dividend payout ratio and existing share repurchase authorization, is offset by CVI's good operating track record and significant consolidated cash balances that continue to support liquidity.
This document summarizes Moody's view as of the publication date and will not be updated until the next periodic review announcement, which will incorporate material changes in credit circumstances (if any) during the intervening period.
The principal methodology used for this review was Refining and Marketing Industry published in November 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
This announcement applies only to EU rated and EU endorsed ratings. Non EU rated and non EU endorsed ratings may be referenced above to the extent necessary, if they are part of the same analytical unit.
This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
Elena Nadtotchi VP - Senior Credit Officer Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Steven Wood MD - Corporate Finance Corporate Finance Group JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653
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