S&P cuts Walter Energy, debt

Standard & Poor's said it lowered its corporate credit rating on Walter Energy Inc. to D from CCC- and its issue-level ratings to D.

The recovery rating on the senior secured debt is 2, which indicates an expectation for recovery at the lower half of the substantial (70% to 90%) recovery range.

The recovery rating on the second-lien debt and the senior unsecured obligations is 6, which indicates an expectation for negligible (0% to 10%) recovery.

S&P said it lowered the ratings after Walter Energy elected not to pay about $19 million in aggregate interest payments on its 9 7/8% senior notes due 2020.

A payment default has not occurred under the indentures governing the notes, which provide a 30-day grace period. However, the agency considers a default to have occurred because it does not expect a payment to be made within the stated grace period given the company's heavy debt burden, which it views to be unsustainable.

In S&P’s opinion, the company will exhaust its sources of liquidity within six months. Cash and investments totaled roughly $435 million on March 31.

S&P lowers NGPL to CCC

Standard & Poor's said it lowered its issuer credit and senior secured ratings on NGPL PipeCo LLC to CCC from CCC+.

The outlook is negative.

The recovery rating is unchanged at 3, indicating "meaningful" (50% to 70%; lower half of the range) expectation of principal recovery if a default occurs.

S&P said the downgrade stems from a combination of related factors. During the past 2½ years, NGPL's financial performance has declined considerably due to reduced throughput on the Louisiana Line. This has stemmed from lower demand for Gulf Coast gas, driven by sharply increased supply from the Marcellus and Utica shale gas-producing areas.

Usage rates have thus been below the agency’s expectations, resulting in adjusted debt to EBITDA of more than 10 times for the 12 months ended March 31. S&P expects that leverage will remain around this level through the end of the year.

S&P lowers Vantage, debt to CCC

Standard & Poor's said it lowered its corporate credit rating on Vantage Drilling Co. to CCC from B-.

At the same time, the agency lowered its issue-level rating on the company's secured debt to CCC from B-. The recovery rating remains 3, indicating an expectation of meaningful (50% to 70%, higher end of the range) recovery in the event of a payment default.

S&P said the downgrade follows Vantage's announcement that it has retained Lazard Freres & Co. to assist in reviewing financing and strategic opportunities.

The company's debt trades substantially below par value and the agency believes that the company could consider a distressed exchange, which it would view as tantamount to default.

S&P raises Far-Eastern Shipping, notes

Standard & Poor's said it raised its long-term corporate credit rating on Far-Eastern Shipping Co. plc to B- from SD (selective default).

At the same time, the agency raised the issue ratings on the existing senior secured notes to B- from D (default). The recovery ratings remain unchanged at 4 and continue to reflect an expectation of average (30%-50%) recovery in the event of a conventional default.

S&P said the action follows the completion of a voluntary cash buyback transaction of Far-Eastern’s outstanding senior secured notes due in 2018 and 2020 as well as its 2017 Russian ruble bonds. The upgrade incorporates the impact of this transaction on Far-Eastern’s credit profile.

The agency previously downgraded the company to SD from CC when it made the buyback offer to investors, which S&P considered to be a distressed exchange.

S&P could cut Swift notes, rates loan B+

Standard & Poor's said it assigned its B+ issue-level rating to Swift Energy Co.'s proposed $640 million senior secured term loan due 2020.

The recovery rating is 1, indicating an expectation of very high (90% to 100%) recovery in the event of payment default.

The agency also placed the CCC+ issue-level rating and 5 recovery rating on the company's senior unsecured notes on CreditWatch with negative implications.

The outlook was revised to negative from stable and the B- corporate credit rating was affirmed.

"The negative rating outlook on Swift Energy reflects the possibility that leverage could deteriorate beyond our current expectations, remaining at levels we would view as unsustainable in 2016," S&P credit analyst John Rogers said in a news release.

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