Fitch gives Kosmos notes B

Fitch Ratings said it gave Kosmos Energy Ltd.’s upcoming $400 million of senior unsecured notes an expected B rating with an RR4 recovery rating and placed the rating on rating watch positive. The agency also upgraded the company's outstanding senior unsecured notes to B/RR4 from B-/RR5 and placed the senior unsecured rating along with B issuer default rating on RWP.

“The RWP follows the announced acquisition of additional interests in Kosmos' existing assets in Ghana from Occidental Petroleum. We view the transaction as significantly credit-enhancing, due to its low-risk, immediate contribution to cash flows and production, as well as given the significant amount of equity being used to fund the acquisition. Following the transaction, we expect Kosmos to be able to internally fund committed capex related to its Tortue LNG project, and to deleverage below 3x by 2023,” Fitch said in a press release.

The new notes will benefit from a senior guarantee from the acquired assets, which are unencumbered by secured debt. “The added cash flow coverage from these assets has led us to upgrade Kosmos's existing senior unsecured notes and change their recovery rating to RR4 from RR5.”

If the deal is completed, Fitch said it may upgrade the IDR and senior unsecured ratings by a notch.

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