Research Update: Sunoco LP Outlook Revised To Positive From Stable On Deleveraging; 'BB-' Ratings Affirmed

Sunoco LP realized a higher fuel gross profit margin during 2020 that allowed it to deleverage and lower its forward-looking leverage target ratio. As a result, we are affirming our 'BB-' issuer credit rating on Sunoco and revising the outlook to positive from stable. We are affirming our 'BB+' senior secured issue-level rating. The recovery rating is '1', indicating our expectation of very high (90%-100%; rounded estimate; 95%) recovery in a payment default scenario. We are also affirming our 'BB-' senior unsecured issue-level rating. The recovery rating is '3', indicating our expectation of meaningful (50%-70%; rounded estimate:60%) recovery in a payment default scenario. The positive outlook highlights the partnership's ability to deleverage over the past year, while pushing out its

...- Sunoco LP realized a higher fuel gross profit margin during 2020 that allowed it to deleverage and lower its forward-looking leverage target ratio. - As a result, we are affirming our '##-' issuer credit rating on Sunoco and revising the outlook to positive from stable. - We are affirming our '##+' senior secured issue-level rating. The recovery rating is '1', indicating our expectation of very high (90%-100%; rounded estimate; 95%) recovery in a payment default scenario. - We are also affirming our '##-' senior unsecured issue-level rating. The recovery rating is '3', indicating our expectation of meaningful (50%-70%; rounded estimate:60%) recovery in a payment default scenario. - The positive outlook highlights the partnership's ability to deleverage over the past year, while pushing out its next senior unsecured debt maturity to 2026. We forecast Sunoco will achieve an adjusted debt-to-EBITDA ratio of 4x-4.5x over the next 24 months....

Research Update