- Canadian Oil Sands' (OTCQX:COSWF) credit rating is downgraded by three notches to junk at Moody's, making it the first large Canadian oil producer to receive a junk rating in at least a decade.
- Moody's cites COSWF's very high cost base and the expectation of very high leverage and weak interest coverage in 2016 and 2017 amid continuing weak oil prices in dropping its debt rating to Ba3, down from the lowest level of investment-grade credit of Baa3.
- Moody's says COSWF's new status as an affiliate of Suncor (NYSE:SU) kept its credit two notches higher than its stand-alone assessment of the company, but the junk rating reflects SU’s decision not to guarantee ~$1.5B in outstanding debt.
- The ratings firm also cuts SU by one notch to Baa1 from A3; the ratings outlook for both companies is stable.