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Announcement of Periodic Review: Moody's announces completion of a periodic review of ratings of Delek US Holdings, Inc.
Global Credit Research - 07 Aug 2020
New York, August 07, 2020 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Delek US Holdings, 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.
Delek US Holdings, Inc.'s (Delek) Ba3 Corporate Family Rating (CFR) reflects its modest scale with four refineries, each having a throughput capacity less than 100 thousand barrels per day that have been operated is such a manner that they can apply for waivers of RINs requirements. It is geographically focused in Texas, Louisiana, and Arkansas. The refineries can benefit from locally sourced crude oil and production from the Permian Basin. Delek has low leverage and an elevated cash balance reflective of its conservative financial policies and very good liquidity that can support it through periods of volatile refining industry profit margins and potentially high RINs expenses. The company also benefits from more stable earnings generated by retail gas station and midstream operations. The midstream business, including its ownership interests in Delek Logistics Partners, LP (B1 Stable), is a source of revenue growth. Its crack spreads have come under severe pressure in 2020 as a result of the economic situation brought on by the coronavirus pandemic that has generally decreased refined products demand in the US. Additionally, the drop in crude oil prices has raised its working capital requirements, but not sufficiently to impair its 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.
James Wilkins Vice President - Senior Analyst 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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