Moody's upgrades Suncor

Moody's Investors Service said it upgraded Suncor Energy Ventures Corp.'s corporate family rating to Ba1 from Ba3, probability of default rating to Ba1-PD from Ba3-PD and senior unsecured ratings on its notes to Ba1 (LGD 4) from Ba3 (LGD 4).

Moody's also said it withdrew the company's SGL-3 speculative grade liquidity rating.

The outlook remains stable.

The two-notch upgrade follows a loan capitalization agreement on intercompany debt executed between Suncor Energy Inc. and Suncor Energy Ventures, Moody's said.

Adjusted debt will fall by nearly two thirds to about $1 billion by the second quarter of 2019, from about $3 billion as of the third quarter of 2018, the agency said.

Its debt-to-EBITDA ratio will settle at about 1.5x, Moody's added.

The ratings benefit from the company's ownership by Suncor Energy Inc., which pushes up the ratings by notches from the company's stand-alone credit profile, the agency said.

The ratings also benefit from low decline mining oil sands reserves with no geologic or exploration risk, Moody's said.

The company is challenged by its very high cost structure, history of reliability issues with its aging upgrader and single-asset concentration, the agency said.

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