Moody's: Venoco notes at Caa1

Moody's Investors Service said it assigned a Caa1 rating to Venoco's proposed $500 million of senior notes and upgraded the rating on the existing senior notes to Caa1 (LGD4, 58%) from Caa2 (LGD6, 90%).

Moody's said it also affirmed the company's B3 corporate family and probability of default ratings and SGL-3 liquidity rating.

The outlook is stable.

Venoco intends to use the proceeds from the proposed notes to repay all borrowings outstanding under its second-lien term loan facility and revolving credit facility and for general corporate purposes.

The upgrade reflects the larger proportion of unsecured debt in the capital structure relative to secured debt due to the addition of the new notes and the retirement of the secured term loan, Moody's said.

Venoco's ratings benefit from the company's increasing percentage of oil production and its focus on raising its percentage of oil production going forward as well as its high leverage on production and reserves due to a historical reliance on debt to fund acquisitions, the agency said.

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