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Fitch Ratings Affirms Marathon Petroleum at BBB

Fitch Ratings has affirmed Marathon Petroleum’s (MPC) Long-term Issuer Default Rating (IDR) along with the senior unsecured ratings at BBB. From Negative, the Rating Outlook has been revised to Stable. It has also affirmed MPC’s Short-term IDR and CP ratings at F3. The upgrades show that the favorable impacts of the pending $21 billion sales of Speedway to 7-Eleven create a short-term cash cushion.

This is the difference between MPC and the other refining peers in the current environment. MPC’s ratings show the company’s status as the largest independent refiner in the country. It has a high-quality, flexible asset base and much more. It also has strong access to historically discounted crudes, low Capex requirements, and an environment in the US that is macroeconomic.

By the record low results for refiners in 2020, these considerations are partly offset. The loss of diversification associated with Speedway is some concerns about the unevenness in the recovery in transport fuel demand. The pandemic linked increase in MPC debt raised the environmental compliance costs.

Recovery Gains Steam: a downstream recovery is expected by Fitch Ratings that will strengthen the 2H21 driven by the increased US vaccination rates. The pent-up leisure and holiday travel demand will be released following the passage of a $1.9 trillion US stimulus package. The product demand refined has recovered and been refined by the core with both gasoline and distillate having made the most out of the declines seen since the pandemic lows. Spreads are showing the strength heading into the driving season and the TSA checkpoints have been also trending higher.

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