Moody's raises Kosmos notes to B3

Moody's Investors Service said it raised the rating on Kosmos Energy Ltd.’s senior unsecured notes to B3 from Caa1. Concurrently, the agency changed the company’s outlook to positive from stable. Moody's also affirmed the company's B2 corporate family rating and B2-PD probability of default rating.

These actions follow Kosmos Energy reporting it acquired most of Occidental Petroleum Corp.'s non-operating interests in the offshore Jubilee and TEN fields in West Africa for $550 million. The transaction closed Wednesday.

The B3 rating on the notes reflects an unsecured claim on the company's assets, including their subordinated position to the secured term loan facility and the secured reserve-based lending facility. The acquired Occidental interest will be held unencumbered within a special purpose entity providing improved support to Kosmos Energy's senior unsecured notes, Moody’s said.

"The positive outlook reflects the company's enhanced scale, free cash flow generation capability and growth runway stemming from the acquisition," said Sajjad Alam, a Moody's vice president, in a press release. "The unsecured notes were upgraded to reflect increased asset coverage through the acquired assets."

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