Moody's rates MEG revolver Ba1

Moody's Investors Service said it assigned a Ba1 (LGD2, 27%) rating to MEG Energy Corp.'s $2 billion senior secured revolving credit facility due May 2018 and affirmed its Ba3 corporate family rating, Ba3-PD probability of default rating, Ba1 senior secured term loan rating, B1 senior notes rating and SGL-2 speculative grade liquidity rating. The outlook is stable.

The agency said MEG's Ba3 corporate family rating reflects a very high current debt level, the execution risk of constructing and ramping up phase 2B to targeted levels through 2014, a relatively small current production base and exposure to volatile light/heavy differentials, as it produces bitumen.

However, the rating also reflects MEG's significant cash position, which, along with cash flow, will enable it to complete phase 2B in mid to late 2013 as well as advance its infill well project, Moody's said.

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