S&P Downgrades C&J Energy Services (CJES) to 'D' Amid Missed Interest Payments

S&P Global Ratings lowered its corporate credit rating on oilfield services provider C&J Energy Services Ltd. (NYSE: CJES) to 'D' from 'CCC-'.

We also lowered the issue-level rating on the company's secured debt to 'D' from 'CCC-'. The recovery rating on the debt remains '3', indicating our expectation of meaningful (50% to 70%, higher end of the range) recovery in the event of default.

The 'D' rating reflects C&J Energy Services' announcement that it has entered into a second forbearance agreement due to missed interest payments and covenant breaches on its credit facilities, including the $284 million principal outstanding on its revolving credit facility maturing in 2020, $569 million principal outstanding on its B-1 term loan due 2022, and $480 million principal outstanding on its B-2 term loan due 2022. The forbearance agreement requires the company to enter into a restructuring support agreement with lenders by July 8, 2016, otherwise the forbearance will terminate. The rating reflects our view that the company will reorganize under Chapter 11.

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