Moody’s downgrades Welltec

Moody’s Investors Service said it downgraded to B3 from B2 Welltec A/S’ corporate family rating and to B3-PD from B2 -PD the probability of default rating.

Concurrently, Moody’s downgraded to B3 from B2 the instrument rating of the $340 million backed senior secured notes maturing in December 2022.

The outlook remains stable.

“Today, Moody’s has downgraded Welltec’s ratings to reflect the sharp decline in oil & gas prices over the past weeks driven by the Covid 19 crisis, which is likely to result in a meaningful decline of Welltec’s revenues and operating performance. Despite Welltec’s ongoing efforts to curtail its cost structure and reduce capex investments, we expect the company to report moderate negative free cash flows in 2020 (Moody’s definition), predominantly driven by the high interest bill of about $36 million (of which €32 million are due to the high 9.5% coupon of the senior secured notes) that weighs on its cash generation,” the agency said in a press release.

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