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S&P downgrades Key Energy
S&P said it lowered the corporate credit rating on Key Energy Services Inc. to CC from CCC-.
The agency also said it lowered the rating on the company's senior secured term loan to CC from CCC+. The recovery rating on the term loan remains at 1, indicating 90% to 100% expected default recovery.
The outlook is negative.
The rating on the company's senior unsecured notes remains at C with a recovery rating of 6, indicating 0 to 10% expected default recovery.
The downgrades follow Key Energy’s disclosure that it entered into confidential agreements with certain holders of its 6¾% senior notes due 2021 and certain lenders of the term loans regarding a financial restructuring, S&P said.
The company recently announced that the discussions remain ongoing with both sides presenting proposals, the agency said.
Based on the disclosure, S&P said it believes a filing under Ch. 11 of the U.S. bankruptcy code will be forthcoming.
The outlook is negative, reflecting the high likelihood that Key will seek to restructure its debt through a prepackaged Ch. 11 proceeding once it comes to terms with creditors, the agency said.
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