S&P rates California Resources loan B

S&P said it affirmed the CCC+ corporate credit rating on California Resources Corp.

The outlook is negative.

The agency also said it assigned a B rating and 1 recovery rating to the company's new $1 billion 1.25 lien term loan due 2022.

The 1 recovery rating indicates 90% to 100% expected default recovery.

S&P also said it affirmed the CCC+ rating on the company's senior secured second-lien notes and revised the recovery rating to 4 from 3, reflecting the addition of the $1 billion first lien term loan due 2022.

The 4 recovery rating indicates 30% to 50% expected default recovery.

S&P also said it affirmed the B rating and 1 recovery rating on the company's existing first-lien debt. The 1 recovery rating indicates 90% to 100% expected default recovery.

The agency also said it affirmed the CCC- rating and 6 recovery rating on the company's senior unsecured debt. The 6 recovery rating indicates 0 to 10% expected default recovery.

The ratings reflect an assessment of the company's improving, but still weak financial measures combined with increased capital spending that should stem production declines following a tumultuous 2016, S&P said.

Nevertheless, the agency said it expects debt leverage to remain very high at more than 7x with no near-term catalyst for significant improvement under base-case assumptions, the agency added.

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