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Moody's downgrades Harvey Gulf
Moody's Investors Service said it downgraded HGIM Corp.'s (“Harvey Gulf”) corporate family rating to B2 from B1, probability of default rating to B3-PD from B2-PD and senior secured credit facility to B2 (LGD3) from B1 (LGD3), assigned an SGL-4 speculative grade liquidity rating and changed the outlook to negative from stable.
The agency said the downgrade reflects the weakening market for offshore supply vessels in the Gulf of Mexico and the company's significant capital commitments for vessels under construction. The weak liquidity rating reflects the need to borrow to finance the construction of new vessels in the face of a likely covenant violation in the second half of 2015, Moody’s said.
The B2 corporate family rating reflects Harvey's modest size, high leverage and exposure to a highly cyclical industry, Moody’s said.
The agency said the negative outlook reflects the weak liquidity position and apparent need to have a leverage covenant waiver in the next 12 months.
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