Fitch downgrades Vertex Energy to ‘CCC+’

Fitch Ratings has downgraded Vertex Energy’s and Vertex Refining Alabama LLC’s Long-Term Issuer Default Ratings to ‘CCC+’ from ‘B-‘. Fitch has also downgraded the rating of Vertex Refining Alabama’s senior secured term loan to ‘B-‘/’RR3’ from ‘B’/’RR3’. “The downgrade reflects Vertex’s weaker liquidity buffer amid lower U.S. Gulf Coast refining crack spreads and weak Fitch-expected contribution from renewable diesel segment in 2024. The company’s FCF generation is highly sensitive to refining crack spreads that declined in 4Q23 from abnormally high 2022-2023 levels. Its unrestricted cash balance fell from $141 million at YE 2022 to around $70-80 million at YE 2023. Fitch projects negative EBITDA and FCF for Vertex in 2024 based on the assumptions of continued crack spread normalization and weak renewable diesel profitability,” the ratings agency stated.