Valero 2015 Annual Report Download - page 18

Table of Contents
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Our ability to obtain credit and capital depends in large measure on capital markets and liquidity factors that we do not control. Our
ability to access credit and capital markets may be restricted at a time when we would like, or need, to access those markets, which
could have an impact on our flexibility to react to changing economic and business conditions. In addition, the cost and availability of
debt and equity financing may be adversely impacted by unstable or illiquid market conditions. Protracted uncertainty and illiquidity in
these markets also could have an adverse impact on our lenders, commodity hedging counterparties, or our customers, causing them to
fail to meet their obligations to us. In addition, decreased returns on pension fund assets may also materially increase our pension
funding requirements.
Our access to credit and capital markets also depends on the credit ratings assigned to our debt by independent credit rating agencies.
We currently maintain investment-grade ratings by Standard & Poor’s Ratings Services (S&P), Moody’s Investors Service (Moody’s),
and Fitch Ratings (Fitch) on our senior unsecured debt. Ratings from credit agencies are not recommendations to buy, sell, or hold our
securities. Each rating should be evaluated independently of any other rating. We cannot provide assurance that any of our current
ratings will remain in effect for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if,
in its judgment, circumstances so warrant. Specifically, if ratings agencies were to downgrade our long-term rating, particularly below
investment grade, our borrowing costs would increase, which could adversely affect our ability to attract potential investors and our
funding sources could decrease. In addition, we may not be able to obtain favorable credit terms from our suppliers or they may require
us to provide collateral, letters of credit, or other forms of security, which would increase our operating costs. As a result, a downgrade
below investment grade in our credit ratings could have a material adverse impact on our financial position, results of operations, and
liquidity.
From time to time, our cash needs may exceed our internally generated cash flow, and our business could be materially and adversely
affected if we were unable to obtain necessary funds from financing activities. From time to time, we may need to supplement our cash
generated from operations with proceeds from financing activities. We have existing revolving credit facilities, committed letter of
credit facilities, and an accounts receivable sales facility to provide us with available financing to meet our ongoing cash needs. In
addition, we rely on the counterparties to our derivative instruments to fund their obligations under such arrangements. Uncertainty and
illiquidity in financial markets may materially impact the ability of the participating financial institutions and other counterparties to
fund their commitments to us under our various financing facilities or our derivative instruments, which could have a material adverse
effect on our financial position, results of operations, and liquidity.
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Our refineries are our principal operating assets. As a result, our operations could be subject to significant interruption if one or more of
our refineries were to experience a major accident or mechanical failure, be damaged by severe weather or other natural or man-made
disaster, such as an act of terrorism, or otherwise be forced to shut down. If any refinery were to experience an interruption in
operations, earnings from the refinery could be materially adversely affected (to the extent not recoverable through insurance) because
of lost production and repair costs. Significant interruptions in our refining system could also lead to increased volatility in prices for
crude oil feedstocks and refined products, and could increase instability in the financial and insurance markets, making it more difficult
for us to access capital and to obtain insurance coverage that we consider adequate.
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