Fitch Hikes Tesoro to Investment Grade

Fitch cited lower debt and scale benefits created by its recent acquisition of a refinery as the reasons for the upgrade.

Tesoro's bank facility rating was upgraded to "BBB-" from "BB," while both its issuer default and senior unsecured notes ratings moved to "BB+" from "BB," just one notch below investment grade.

Tesoro has been rapidly cutting debt, Fitch said, adding that the company's debt-to-capitalization ratio was 37 percent at the end of the second quarter, already ahead of management's goal of 40 percent for the end of the year.

Tesoro's recent acquisition of a 100,000 barrels per day refinery in Los Angeles should help improve scale and diversify Tesoro's operations, adding another benefit to its credit outlook, Fitch said.

Fitch also placed a stable outlook on Tesoro.

Shares of Tesoro rose $1.36, or 2.9 percent, to $49.12 in afternoon trading. Shares have traded between $26.47 and $64.65 during the past 12 months.