On August 2, 2016, S&P Global Ratings lowered its corporate credit rating on California Resources Corporation to CC from CCC+, its second-lien debt rating to CC from B and its senior unsecured issue-level ratings to CC from CCC+. “The rating actions reflect our view of California Resources’ announcement that it plans to issue a $525 million tender offer to holders of its senior unsecured and second-lien notes,” said S&P Global Ratings credit analyst Paul Harvey. “We view the transaction as distressed…,” he added.
On August 2, 2016, Moody’s Investors Service downgraded California Resources Corporation’s corporate family rating to Caa2 from Caa1, probability of default rating to Caa2-PD from Caa1-PD, secured second lien notes rating to Caa3 from Caa1 and the ratings on the unsecured notes were downgraded to Ca from Caa3. “While California Resources Corporation’s debt exchange reduces total debt, potentially higher interest expense as a result of costlier debt, as well as declining production rates amid weak market conditions will continue to challenge the company’s credit metrics in 2016 and 2017,” stated James Wilkins, Moody’s Vice President- Senior Analyst. Read more on distressed companies.
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