Moody's rates Kodiak Gas notes Caa2

Moody's Investors Service said it assigned a B3 corporate family rating and B3-PD probability of default rating to Kodiak Gas Services, LLC.

The agency also assigned a Caa2 (LGD 5) rating to Kodiak's proposed $400 million senior unsecured notes due 2027.

The outlook is stable.

The proceeds will be used to partially repay borrowings under the existing senior secured revolving credit facility, Moody's said.

As part of the transaction, the company is also establishing a new revolver that will not be rated.

The ratings reflect high financial leverage of more than 7x in 2019, its small revenue base and its customer revenue concentration, the agency said.

These risks are partially offset by the company's good market position, durable customer relationships, fee-based contracts, high levels of equipment utilization and good EBITDA margins, Moody's said.

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