S&P ups Alpha Metallurgical loan

S&P said it raised Alpha Metallurgical Resources Inc.’s senior secured debt rating to B from B-, affirmed the B- issuer rating and revised the outlook to positive from stable. The debt’s 2 recovery rating (70%-90%; rounded estimate: 85%) is unchanged.

“Alpha Met ended 2021 with adjusted leverage of 1.8x. We expect this to improve to below 1.5x in 2022 and 2023 despite our assumptions of steep moderation in prices in 2023. This compares favorably to our prior expectation of greater than 8x debt to EBITDA in 2021 and 2.3x in 2022. In the second half of 2021, Alpha Met paid an aggregate of $101.1 million in voluntary principal payments on the term loan.

“In the first two months of 2022, Alpha has remained committed to its agenda by committing another $150 million in voluntary principal payments to pay off funded debt, bringing the outstanding term loan to $300 million. The company has indicated its intention to pay off the term loan in 2022 should favorable market conditions persist,” S&P said in a press release.

The revised outlook indicates the possibility of an upgrade if the company can maintain metrics such that FOCF remains positive and adjusted leverage remains below 3x.

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