Moody's rates Jupiter notes B3

Moody's Investors Service said it assigned a B3 (LGD4) rating to Jupiter Resources Inc.'s proposed $1.1 billion of senior notes. The B2 corporate family rating, B2-PD probability of default rating and SGL-3 speculative grade liquidity rating were unchanged. The outlook remains stable.

The proceeds of the notes will be used to partially finance the acquisition of the Bighorn asset from Encana Corp. for C$2 billion.

The agency said Jupiter's B2 corporate family rating is driven by weak cash flow leverage metrics, cash margin and leveraged full-cycle ratio, all reflecting Jupiter's high percentage of dry gas and ethane production, which comes from a single field.

The stable outlook reflects Moody’s expectation that Jupiter will increase its production and reserves base by 2016 while maintaining adequate leverage metrics.

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