S&P puts EnQuest on positive watch, rates notes B+

S&P said it placed its B- issuer credit rating on EnQuest plc on CreditWatch with positive implications, reflecting the likelihood that S&P will upgrade the company to B after a planned refinancing, provided it is completed as intended.

S&P assigned a preliminary B+ rating to the proposed senior unsecured notes due 2027, reflecting an expectation of substantial recovery in the hypothetical event of payment default.

EnQuest announced a refinancing that will extend the maturities of most of its debt instruments, substantially improving its liquidity position, S&P noted.

“Our expectation of supportive oil prices translates into strong free operating cash flow (FOCF) over 2022-2023, while management's focus on leverage means gross debt may decline further,” the agency said in a news release.

S&P did not take a rating action on the existing senior unsecured notes rated B because S&P expects the company to redeem them as part of the refinancing.

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