Moody's rates Maverick Tube

Moody's Investors Service said it assigned new ratings to Maverick Tube Corp.

With a stable outlook, Moody's assigned a Ba3 corporate family rating to Maverick and a B2 rating to the company's existing 1.875% $250 million senior subordinated convertible notes issued November 2005.

The stable outlook assumes the company will maintain its leverage in within the 2.5x to 3.0x range in the upcycle.

The Ba3 rating reflects Maverick's position as a leading provider of Oil Country Tubular Goods (OCTG), line pipe and steel electrical conduit manufacturing and the comparatively solid financial profile which compares favorably to the Ba3 rated oilfield services peer group.

However, the ratings are restrained by the company's exposure to the inherently volatile oil and gas industry, and more specifically, the drilling cycle which moves in conjunction with commodity prices; the cost pressures associated with steel prices; intense competition from imports, which puts pressure on pricing of about half of its OCTG products sales; and the company's use of debt to repurchase a significant amount of stock in 2005.

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