Moody’s cuts Westmoreland Coal, loan, notes

Moody's Investors Service said it downgraded the ratings of Westmoreland Coal Co., including the corporate family rating to Caa1 from B3, probability of default rating to Caa1-PD from B3-PD and senior secured credit facility and senior secured notes to Caa3 from Caa1.

The speculative grade liquidity rating of SGL-3 remains unchanged.

The outlook is stable. This concludes the review initiated on Jan. 21 when Moody's placed all ratings on review for downgrade, reflecting an effort to recalibrate ratings in the mining sector given perceived fundamental shift in the operating environment.

Moody’s said the downgrade reflects its expectation that the company's leverage metrics and cash flow generation will continue to be under stress due to the headwinds facing the coal industry. As of Sept. 30, the company's debt/EBITDA, as adjusted, stood at 6 times.

The agency does not see a catalyst for significant improvements in these metrics over the next 12 to 18 months. Moody’s believes there is a material downside risk over the medium term due to possible closing of coal plants serviced by the company's mines in favor of gas-fired generation.

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