S&P downgrades Superior Energy

S&P said it lowered the corporate credit rating on Superior Energy Services Inc. to BB- from BB.

The agency also said it lowered the rating on Superior's senior unsecured debt to BB- from BB and revised its recovery rating to 3 from 4, indicating 50% to 70% expected default recovery.

The outlook is negative.

The downgrades reflect an expectation that average core ratios will fall to the highly leveraged category over the next two years, driven by continued modest spending levels of the exploration and production industry, S&P explained.

Capital spending in the exploration and production industry sharply deteriorated in 2015 and 2016, resulting in significant pricing pressures for oilfield service companies, the agency said.

While industry trends are expected to improve in 2017 and 2018 buoyed by improved crude oil prices, S&P said it continues to expect pricing below levels in the past.

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