Fitch gives MEG notes B+

Fitch Ratings said it assigned a B+/RR3 rating to MEG Energy Corp.’s proposed senior unsecured note issuance. MEG Energy’s long-term issuer default rating is B.

The company plans to offer $800 million of senior unsecured notes due 2027 and use the proceeds, including cash on hand, to refinance the 2023 senior unsecured notes and a portion of the senior secured second-lien notes due 2025.

MEG’s ratings reflects improving credit metrics, below average refinancing risk (no major bond maturities until 2024 following the proposed refinancing and revolver extended to 2024), good liquidity, the expectation that the company will generate positive free cash flow over the forecasted period, higher production capacity, improved transportation logistics that should lead to higher realized prices and low-cost structure.

The outlook is positive.

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