Suncor continues to buy back debt despite ratings cut, lower oil prices

dan_prat/iStock Unreleased via Getty Images

Suncor Energy (NYSE:SU) said Monday it plans to buy back as much as C$1.75B (US$1.27B) of securities from 10 series of outstanding notes in U.S. and Canadian dollars, proceeding with the tender shortly after S&P Global Ratings downgraded the company as it tightened credit ratio thresholds for Canadian oil companies.

S&P downgraded Suncor (SU) by one notch to BBB, its second lowest investment grade rating, with a negative outlook even as the company is expected to continue reducing debt.

Canadian oil sands producers "have benefited significantly from high crude prices and the decline in heavy crude imports to the U.S. from Venezuela," Bloomberg Intelligence credit analyst Jaimin Patel said.

Suncor (SU) is benefiting from the resurgence in oil and gas prices, and is the cheapest major integrated, North American asset name, Paul Franke writes in a bullish analysis posted recently on Seeking Alpha.