S&P cuts Perpetual Energy to SD, notes to D

Standard & Poor's said it lowered its long-term corporate credit rating on Perpetual Energy Inc. to SD (selective default) from CC.

At the same time, the agency lowered its issue-level rating on the company's senior unsecured notes to D (default) from C. The recovery rating is unchanged at 5, indicating an expectation of modest recovery (10% to 30%; in the high end of the range) in the event of a default.

"Perpetual's agreement to swap a portion of its rated public debt for the shares it currently holds in Tourmaline Oil Corp. constitutes a default under our rating criteria," S&P credit analyst Michelle Dathorne said in a news release.

The company swapped C$150 million senior notes (C$76.8 million of the 2018 notes and C$73.2 million of the 2019 notes) for 3.1 million Tourmaline shares. Based on current market values, S&P estimates the total considerations offered equals about 60% of the bonds' par value.

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