Moody’s downgrades Alta Mesa, debt

Moody's Investors Service said it downgraded Alta Mesa Holdings, LP's corporate family rating to Caa1 from B3, probability of default rating to Caa1-PD from B3-PD, senior unsecured rating to Caa2 from Caa1 and affirmed the SGL-4 speculative grade liquidity rating.

The outlook is negative. This action concludes the review initiated on April 29.

"Alta Mesa will continue to struggle with weak liquidity, high leverage and limited cash flow generation in a low commodity price environment through 2016," Moody's assistant vice president and analyst Sajjad Alam.

"Although the company has made progress in shoring up its liquidity position in 2015 by issuing a $125 million second-lien term loan, it will continue to face elevated covenant violation risks through 2016 absent further reduction in debt level or a material recovery in oil prices."

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