S&P rates American Energy loan BB-, notes CCC+

Standard & Poor’s said it assigned a B corporate credit rating to American Energy – Permian Basin LLC.

The agency also said it assigned a BB- rating with 1 recovery rating to the company’s planned $1 billion RBL facility with an initial borrowing base of $500 million. The 1 recovery rating indicates 90% to 100% expected default recovery.

The agency also said it assigned a CCC+ rating with a 6 recovery rating to the company’s proposed $1.4 billion senior unsecured notes maturing between 2019 and 2021. The 6 recovery rating indicates 0% to 10% expected default recovery.

The outlook is stable.

The stable outlook reflects an expectation that American Energy’s operating cash flow and availability under its RBL facility will be sufficient to fund planned capital spending over the next year and that the company will be successful in significantly expanding its production and reserves from initial levels, S&P said.

The ratings would be jeopardized if the company did not maintain adequate liquidity with credit availability and operating cash flow more than sufficient to support development-related capital spending at least at maintenance levels, the agency said.

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