Moody's downgrades Geo Energy

Moody's Investors Service said it downgraded the corporate family rating of Geo Energy Resources Ltd. to Caa3 from Caa1. In addition, Moody's downgraded to Caa3 from Caa1 the senior unsecured guaranteed notes issued by Geo Coal International Pte. Ltd., a wholly owned subsidiary of Geo Energy. The outlook on these ratings remains negative.

"The downgrade reflects a material deterioration in Geo Energy's liquidity following the company's continued discounted buybacks of its U.S. dollar notes," said Maisam Hasnain, a Moody's assistant vice president and analyst, in a press release.

"In addition, we believe that continued discounted buybacks represent an aggressive financial policy, particularly when the company needs to preserve cash to make an acquisition to prevent a put option on its bond by April 2021," added Hasnain, also Moody's lead analyst for Geo Energy.

On Tuesday, Geo Energy announced it spent $42.8 million to buy back $75.8 million in principal on its dollar-denominated notes.

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