S&P: Key Energy view to negative

Standard & Poor’s said it revised the outlook on Key Energy Services Inc. to negative from stable.

The agency also said it affirmed the company’s BB- corporate credit rating.

S&P also said it also affirmed the BB- rating on Key Energy’s existing senior unsecured notes due 2021. The recovery rating on this debt remains at 4, indicating 30% to 50% expected default recovery.

The revised outlook reflects the potential for a downgrade within the next 12 months, primarily reflecting Key Energy’s sharp decline in profitability over the past year resulting from lower levels of customer activity and scheduling disruptions that resulted in reduced asset utilization, the agency said.

Now, the company’s recovery is expected to take longer than previously expected and credit measures to be below prior expectations, including total debt-to-EBITDA in the mid-to high-3x range, S&P said.

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