S&P trims Key Energy Services

Standard & Poor’s said it lowered its corporate credit rating on Key Energy Services Inc. to CCC+ from B. The outlook is stable.

At the same time, S&P lowered the issue-level ratings on the company’s senior secured term loan to B from BB-. The recovery rating on the term loan remains 1, indicating a very high (90% to 100%) recovery in the event of a payment default.

S&P also lowered the issue-level ratings on the company’s senior unsecured notes to CCC+ from B, and maintained a 4 recovery rating, indicating average (30% to 50%, high end of the range) recovery in the event of a payment default.

S&P noted that capital spending in the U.S. oil and natural gas exploration and production industry has sharply deteriorated in 2015 in response to low oil and natural gas prices. Consequently, S&P reduced its revenue and EBITDA margin assumptions for U.S. oilfield services provider Key Energy Services and expects debt leverage to materially increase from S&P’s previous forecast.

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