S&P Downgrades Stone Energy (SGY) to 'D' Following Missed Interest Payment

S&P Global Ratings lowered its corporate credit rating on Stone Energy Corp. (NYSE: SGY) to 'D' from 'CCC-'.

At the same time, we lowered our issue-level rating on the company's senior unsecured debt to 'D' from 'CCC-'. The recovery rating is '3H', indicating our expectation of meaningful (high end of the 50% to 70% range) recovery in the event of a payment default.

"The 'D' rating reflects our expectation that Stone Energy will elect to file for Chapter 11 bankruptcy protection rather than make the May interest payment on its 7.5% senior unsecured notes due 2022," said S&P Global Ratings credit analyst David Lagasse.

Our expectation reflects our assessment that onerous debt maturities and financing costs through 2017, combined with continued weak crude oil and natural gas prices, will result in Stone reorganizing under Chapter 11 protection as a means to restructure its heavy debt and interest expense obligations.

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