S&P rates Tesoro notes BB+

Standard & Poor's said it assigned its BB+ senior unsecured rating to Tesoro Corp.'s proposed $900 million senior unsecured notes due 2012 and 2015, with the principal related to each maturity yet to be determined. S&P said it also affirmed the company's BB+ corporate credit rating.

The outlook is stable.

Proceeds from the notes will be used to refinance Tesoro's outstanding 9 5/8% senior subordinated notes due 2008, 9 5/8% senior subordinated notes due 2012 and 8% senior secured notes due 2008.

Tesoro will have about $900 million of debt on a pro forma basis after the transaction, according to the agency.

S&P said the ratings on Tesoro reflect its position as an independent oil refiner and marketer operating in a very competitive, volatile and erratically profitable industry burdened by high fixed costs.

To buffer the affect of these weaknesses, Tesoro has strong asset quality, advantaged operating locations, solid liquidity and a limited degree of retail-derived margin stability, the agency said.

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