Moody’s trims Covia, view to stable

Moody’s Investors Service said it lowered Covia Holdings Corp.’s corporate family rating to B3 from B1, probability of default rating to B3-PD from B1-PD and the senior secured credit facility rating to B3 from B1. Moody’s also maintained Covia’s speculative grade liquidity of SGL-3.

The downgrade reflects Moody’s expectations that revenues, profitability and key credit metrics will remain under pressure for the rest of 2019 and stabilize in 2020 due to on-going volatility in the oil and natural gas end market and persistent weakness in the frac sand industry. Despite recent mine closures and production cuts, Moody’s does not expect significant price recovery anytime soon, as many miners have committed to higher volume at lower prices. In addition, during 2020, Moody’s expects in-basin sand to completely displace Northern White Sand ("NWS") in the Permian, Eagle Ford and Mid-Continent basins,” Moody’s said in a press release.

Moody’s revised the outlook to stable from negative. “The stable outlook reflects Moody’s expectations that Covia’s industrial sand segment and its sizable cash position will provide relative operating and financial stability during the on-going volatility in the oil & gas end market,” the agency said.

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