TEXT - S&P rates Tesoro Corp term loan

Wed Jan 16, 2013 2:31pm EST

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Jan 16 - Standard & Poor's Ratings Services said today that it assigned its
'BBB-' issue rating and '2' recovery rating to San Antonio, Texas-based Tesoro
Corp.'s proposed $500 million term loan B that will mature in 2016. The company
intends to use net proceeds from the offering to finance the purchase of British
Petroleum's integrated Southern California refining and marketing business and
for general corporate purposes. The term loan will be secured by a perfected
security interest in all equity interests of certain subsidiaries and certain
trademarks owned and acquired by the borrower and a second priority interest in
other tangible and intangible assets.  

The rating reflects the consolidated credit quality of Tesoro and its 
operating subsidiaries, its "fair" business risk profile, and "significant" 
financial risk profile. The issue rating is one notch above the corporate 
credit rating given the collateral package. We expect "substantial" recovery 
on the debt in case of a payment default. Currently, Tesoro Corp. has about 
$1.3 billion in debt outstanding. In 2013, we expect Tesoro's debt/EBITDA to 
be roughly at 1.5x to 2x, and for the company to maintain adequate liquidity. 

RELATED CRITERIA AND RESEARCH
     -- Business/Financial Risk Matrix Expanded, Sept. 18, 2012
     -- Key Credit Factors: Criteria For Rating The Global Oil Refining 
Industry, Nov. 28, 2011
     -- Assumptions For Assigning Recovery Ratings To The Debt Of U.S. Oil 
Refining Companies, March 14, 2011

RATINGS LIST

Tesoro Corp.
Corp. credit rating                  BB+/Stable/--

New Rating
Proposed $500 mil term loan B        BBB-
  Recovery rating                    2
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