Moody’s rates Perpetual notes Caa1

Moody's Investors Service said it assigned a Caa1 rating to Perpetual Energy Inc.'s proposed C$100 million senior unsecured notes offering.

The outlook was changed to stable from negative.

Perpetual's Caa1 corporate family, Caa1-PD probability of default, Caa1 senior unsecured notes and SGL-4 speculative grade liquidity ratings were affirmed.

Proceeds will be used to redeem the 7¼% C$100 million convertible debenture.

"The change in outlook to stable reflects that Perpetual will refinance a significant portion of the upcoming maturities in its capital structure," Moody's analyst Paresh Chari said in a news release. "As well, the East Edson joint venture will increase production and reserves, a marked change from the declines seen since 2011."

Moody’s said the C$100 million and C$150 million senior unsecured notes are rated at the Caa1 corporate family rating due to the amount of lower ranking subordinated debt (C$60 million, unrated) in the capital structure, which offsets the priority ranking of the C$120 million borrowing base revolver. This notching is in accordance with Moody's Loss Given Default Methodology.

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