S&P upgrades Key Energy

Standard & Poor’s said it raised the rating on Key Energy Services Inc.’s $675 million senior unsecured notes due 2021 to BB- from B+ and revised its recovery rating to 2 from 4.

The rating is one notch above the company’s B+ corporate credit rating, which remains unchanged. The 2 recovery rating indicates 70% to 90% expected default recovery.

The outlook is negative.

The upgrade on the notes and revised recovery rating reflects lower committed borrowing capacity on Key’s revolving credit facility due 2016, S&P said, and a view that lenders’ recovery prospects have improved as a result.

Commitments under its revolving credit facility were reduced to $400 million from $550 million previously, the agency said. Commitments will be reduced further to $350 million on July 1, 2015, S&P said.

The revised commitments are part of recent amendments to Key’s credit facility, the agency said. This includes amended financial covenants that provide the company additional covenant cushion and financial flexibility, S&P added.

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