Fitch rates Kosmos notes BB

Fitch Ratings said it assigned Kosmos Energy Ltd. proposed $600 million senior notes due 2026 an expected foreign-currency senior unsecured rating of BB/RR2/79%.

The outlook is stable.

The agency said the notes are rated two notches above Kosmos' long-term issuer default rating of B+ based on recoveries of 79% predicted under Fitch's recovery analysis.

The proposed bond will be issued at the ultimate holding company level and will rank pari passu with the $400 million corporate revolver. Both will be effectively subordinated to the $1.7 billion secured reserve-based lending facility maturing in 2025 but will benefit from a senior unsecured guarantee from the subsidiaries owning the recently acquired assets in the Gulf of Mexico.

Kosmos intends to use the proceeds from the proposed notes to refinance its existing $525 million senior bonds due in 2021. The remaining amount raised will be used to repay outstanding borrowings under the company's revolver.

“The proactive refinancing of the company's debt capital structure well ahead of maturity is positive from credit perspective,” the agency said in a news release.

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