S&P cuts Denbury notes to D

S&P said it lowered the issue-level rating on Denbury Resources Inc.'s subordinated notes due 2021 to D from CC. All other ratings on the company and its debt remain unchanged, including the D issue-level rating on the subordinated notes due 2022 and 2023 and the SD corporate credit rating.

The downgrade follows Denbury's announcement that some debtholders agreed to exchange outstanding senior subordinated notes due 2021, 2022 and 2023 for new senior secured second-lien notes and convertible senior notes at below par.

Combining the previously announced note exchanges that closed on Dec. 6, 2017 and the exchanges closing on Jan. 9, 2018, the company will have exchanged about $784 million principal amount of existing notes for approximately $600 million principal of new notes.

“We view the transaction as a distressed exchange because investors will receive less than promised on the original securities. Additionally, we view the offer as distressed, rather than purely opportunistic, given our view that the company has limited growth opportunities in the current low-price commodity environment and its debt leverage will remain high,” S&P said in a news release.

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