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Moody's rates Memorial notes Caa1
Moody's Investors Service said it assigned a Caa1 (LGD5, 85%) rating to Memorial Resource Development Corp.'s proposed $300 million senior notes due 2022. To the company, Moody's assigned a B2 corporate family rating, a B2-PD probability of default rating and an SGL-2 speculative grade liquidity rating. The outlook is stable.
At the same time, the agency withdrew Memorial Resource Development LLC’s B3 corporate family rating, B2-PD probability of default rating and SGL-2 speculative grade liquidity rating and the B3 (LGD4, 66%) rating assigned to its $350 million senior PIK toggle notes.
Memorial completed its initial public offering on June 18 and used $360 million of the net proceeds to pay off Memorial Resource Development LLC’s PIK toggle notes. The company also entered into a $2 billion senior secured revolving credit facility with an initial borrowing base of $725 million and used $620 million to pay off in full and terminate WildHorse Resources, LLC's revolver and second-lien term loan. Proceeds from the proposed $300 million notes offering will be used to repay a portion of the outstanding borrowings under Memorial’s revolver.
The agency said Memorial’s B2 corporate family rating reflects its scale, geographically concentrated reserve and production profile and high exposure to low natural gas prices on a majority of its production. The rating is one notch higher than Memorial Resource Development LLC's B3 corporate family rating and incorporates Memorial’s simplified capital structure and enhanced financial flexibility following the close of its initial public offering and the establishment of a revolver, Moody’s said.
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