New York-Standard & Poor’s Rating Services has downgraded the outlook for refiner and nitrogen marker Coffeyville Resources LLC from stable to negative, citing concerns regarding near-term cash flow stability and the potential for lower debt amortization on the outstanding term loan that may result from demand and margin contraction on refined products. Specifically, S&P worries that market conditions for diesel and fertilizer may weaken without a corresponding improvement in gasoline margins. S&P said this could put pressure on the company’s financial covenants and further reduce cash sweeps. S&P has affirmed Coffeyville’s B corporate credit rating and BB- issue-level rating on its senior secured credit facilities, indicating expectations for a very high (90-100 percent) recovery of principal in a payment default.
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