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S&P cuts Ensign Drilling
S&P said it cut Ensign Drilling Inc. to SD from CCC+ and its senior unsecured notes due 2024 to D from CCC+.
“The downgrade reflects Ensign's below-par debt repurchases, which cumulatively over the past several quarters represent a meaningful proportion of the original principal. In 2020, the company repurchased $198.7 million of its 9¼% unsecured notes due 2024 for approximately 39% of par, on average. This represents about 28% of the original $700 million notes and 16% of Ensign's overall year-end 2019 long-term debt,” S&P said in a press release.
The default only affects the notes so S&P said it lowered Ensign’s rating to SD.
“We plan to reevaluate the issuer credit rating in the near term based on our conventional assessment of default risk. Our review will focus on the long-term viability of the company's capital structure and liquidity position amid challenging industry conditions for drilling activity. We will likely keep the unsecured notes rating at D until we believe the likelihood of further repurchases is remote,” the agency said.
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