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S&P cuts Key Energy Services
S&P said it lowered its corporate credit rating on Key Energy Services Inc. to CCC- from CCC+. The outlook is negative.
In addition, S&P lowered the issue-level rating on the company’s senior secured term loan to CCC+ from B. The recovery rating on the term loan remains 1, indicating a very high (90% to 100%) recovery in the event of payment default.
S&P also lowered the issue level rating on the company’s senior unsecured notes to C from CCC+ and revised the recovery rating to 6 from 4, indicating negligible (0% to 10%) recovery in the event of payment default.
The lower valuation reflects the company’s exit from its international business, which results in lower EBITDA assumptions at the emergence of bankruptcy and a lower EBITDA multiple, the agency said.
“The downgrade reflects our expectation that cash flow and credit measures will continue to deteriorate over the next year such that liquidity materially deteriorates in 2016,” said S&P credit analysts David Lagasse in a news release.
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