S&P rates Ascent Resources notes B

S&P said it rated Ascent Resources Utica Holdings LLC’s planned $350 million of senior unsecured notes due 2029 B with a 4 recovery rating. Subsidiary ARU Finance Corp. will sell the notes.

Concurrently, S&P raised Ascent’s issuer credit rating to B from B- and the issue-level rating on the company's second-lien term loan due in 2025 to BB- from B+ with a recovery rating of 1, indicating an expectation for very high recovery in the event of default. Finally, the agency raised the company's senior unsecured issue ratings to B from B- with a recovery rating of 4, indicating an expectation of average recovery.

Ascent plans to use proceeds to reduce borrowings on its $1.85 billion revolving credit facility.

“Ascent will have about $1.1 billion of liquidity pro forma for the transaction. The company has also actively managed its debt maturity schedule with its next maturity its RBL coming due in April 2024 (pro forma borrowings and letters of credit total $768 million). With these actions and the company's plan for maintenance capital expenditures (capex), Ascent has positioned itself to generate free cash flow for further debt reduction in 2021 and 2022,” the agency said in a press release.

The outlook is stable.

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