S&P downgrades HGIM

S&P said it downgraded HGIM Corp. to CCC+ from B- and the rating on the company’s $350 million first-lien term loan due in 2023 to B- from B. The recovery rating is 2, which indicates an expectation of substantial (70%-90%; rounded estimate: 75%) recovery of principal in the event of a payment default.

“We expect oilfield services sector demand will be hurt by the collapse in oil prices. The recent drop in oil prices – driven by the Saudi-Russian price war and worsened by the unprecedented drop in demand as a result of the coronavirus pandemic – has led to sharp reductions in E&P capital spending plans for 2020,” said S&P in a press release.

“Offshore producers will likely remain more cautious about committing capital to longer-term projects until market fundaments are more stable, which could affect HGIM’s revenues beyond the near-term,” S&P said.

The outlook is negative.

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