S&P ups BEP Ulterra

S&P said it raised its ratings on BEP Ulterra Holdings Inc. and its term loan due 2025 to B- from CCC+. The loan’s recovery rating is unchanged at 3, reflecting meaningful (50%-70%; rounded estimate: 50%) recovery in default.

“As a result of strong crude oil and natural gas prices, domestic and international rig counts–direct revenue drivers for Ulterra–continue to march higher. We expect this revenue tailwind will continue through 2022 and estimate the company's variable cost structure will be somewhat resilient in the face of inflationary pressures related to labor and materials which are subject to annual contracts,” S&P said in a press release.

The agency said it forecasts Ulterra’s funds from operation to debt of 25%-30% over the next two years with about 3x debt to EBITDA.

The outlook is stable.

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