Standard & Poor’s has announced:
- •We are revising our outlook on Husky Energy Inc. to stable from negative.
- •We are also affirming our ratings on the company, including our ‘BBB+’ long-term corporate credit rating (CCR) on Husky.
- •The outlook revision reflects the company’s successful completion of asset sales to date, which have strengthened cash flow metrics (on a net debt basis) above our forecast estimates from October 2015.
- •The ‘BBB+’ CCR reflects a ‘bbb’ initial anchor score, and the application of a one-notch enhancement due to our assessment of Husky as a moderately strategic holding for its major shareholder.
- •We are also removing the positive CRA modifier, because the factors supporting its initial application have been satisfied.
…
We would lower the rating to ‘BBB’ if the company’s financial risk profile deteriorates materially from our current estimates. Specifically, we would lower the rating if Husky’s three-year, weighted-average FFO-to-debt ratio fell below 30%, and we believed it would remain below this threshold consistently. FFO-to-debt ratios below this level would neither support a ‘bbb’ anchor nor the application of a positive CRA modifier.
Based on our current assessment of Husky’s business risk profile, which we do not expect to strengthen during our 24-month outlook period, we do not believe the company’s financial risk profile could strengthen to the level necessary to support an ‘A-‘ rating. To support that rating, Husky’s three-year, weighted-average FFO-to-debt ratio would have to strengthen and remain above 60%, and the company would need to consistently generate positive FOCF such that its FOCF-to-debt ratio would remain above 40%. Due to the oil and gas industry’s capital-intensive nature, we do not believe an oil and gas company could generate and sustain positive FOCF at these levels, so an upgrade to ‘A-‘ is not likely during our outlook period.
Affected issues are HSE.PR.A, HSE.PR.B, HSE.PR.C, HSE.PR.E and HSE.PR.G.
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HSE: Credit Outlook Improves To ‘Stable’ Says S&P
Standard & Poor’s has announced:
Affected issues are HSE.PR.A, HSE.PR.B, HSE.PR.C, HSE.PR.E and HSE.PR.G.
This entry was posted on Friday, August 26th, 2016 at 10:21 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.