Moody's trims Nostrum

Moody's Investors Service said it downgraded Nostrum Oil & Gas plc's corporate family rating to Caa3 from Caa2 and probability of default rating to Caa3-PD from Caa2-PD. Concurrently, Moody's downgraded to Caa3 from Caa2 the ratings of guaranteed senior unsecured notes issued by Nostrum's wholly owned subsidiary Nostrum Oil & Gas Finance BV. The outlooks of Nostrum and Nostrum Oil & Gas Finance remain negative.

Nostrum's downgrade to Caa3 reflects the continuing decline in the company's hydrocarbon production volumes, with no clear path for the company to materially increase its cash flow generation, which further increases the refinancing risk and the probability of default (including distressed exchange) on its $725 million of notes due July 2022.

Nostrum's leverage, measured as Moody's-adjusted debt/EBITDA, will likely increase above 6.5x as of year-end 2020, compared with 5.8x as of Sept. 30 and 4.9x as of year-end 2018.

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