Moody's rates McMoRan B3, notes Caa1

Moody's Investors Service said it assigned a B3 corporate family rating to McMoRan Exploration Co., an SGL-3 speculative-grade liquidity rating and, under its loss given default methodology, a Caa1 (LGD 5, 77%) rating to the company's pending $400 million offering of seven-year senior unsecured notes and a B3 probability of default rating.

Along with proceeds from recent $201.5 million common stock and $225 million convertible preferred offerings, note proceeds will repay a seven-year $800 million unsecured bridge loan, the agency said.

The outlook is stable.

According to the agency, the ratings are restrained by McMoRan's very high leverage on reserves, the heightened risk to debt holders from the small scale of its currently producing reserves, the very short reserve life of McMoRan's currently producing reserves, high reserve replacement costs and heavy capital requirements.

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