S&P cuts Murray Energy debt, rates loans B+

Standard & Poor's said it assigned its B+ issue-level rating (the same as the corporate credit rating) to Murray Energy Corp.'s proposed $1.7 billion five-year term loan and $300 million two-year term loan.

The recovery rating is 3, which indicates an expectation for meaningful (50% to 70%; high end of the range) recovery in the event of a payment default. (The term loans replace a single $1.7 billion term loan offering rated BB- on March 24 as part of an earlier iteration of this transaction.)

The agency also lowered its rating on Murray Energy’s senior secured debt to B+ from BB- and revised the recovery rating to 3 from 2, indicating an expectation of meaningful recovery (high end of the 50% to 70% range) in the event of a payment default.

The B- issue-level rating on the company's proposed $1.3 billion second-lien notes (upsized from $860 million) remains unchanged. The recovery rating is 6, indicating an expectation of negligible recovery (0% to 10%) in the event of a payment default.

The corporate credit rating is unchanged at B+ with a stable outlook.

Proceeds will be used to fund the acquisition of a stake in Foresight Energy LP, refinance some of the company's existing debt and fund various other transaction-related fees and expenses.

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