S&P Upgrades Halcon Resources (HK) to 'B-' Following Emergence from Bankruptcy
- Netflix, Inc. (NFLX) Tops Q4 EPS by 1c; Subs Beat Views
- S&P 500 ends up slightly with boost from financials; Netflix up late
- Nestle Said Examining Takeover of Mead Johnson (MJN) - Source
- La Quinta Holdings (LQ) Gains on Plan to Split in Two
- After-Hours Stock Movers 01/18: (OCLR) (CSX) (NFLX) Higher; (AMDA) (RCII) (ZYNE) Lower (more...)
News and research before you hear about it on CNBC and others. Claim your 2-week free trial to StreetInsider Premium here.
S&P Global Ratings raised its corporate credit rating on Halcón Resources Corp. (NYSE: HK) to 'B-' from 'D'. The outlook is stable.
We also raised the issue-level rating on the company's second-lien notes to 'B-' from 'CCC+'. The recovery rating on the notes is '3', reflecting our expectation of meaningful (50%-70%, upper half of the range) recovery in the event of a conventional default.
"The upgrade follows Halcón's emergence from bankruptcy and its comprehensive financial restructuring," said S&P Global Ratings credit analyst Ben Tsocanos. "The company reduced debt by approximately $1.8 billion as a result and we forecast that its financial leverage will remain at sustainable levels," he added.
We view Halcón's operating costs as relatively high, however, and expect that many of its properties require oil prices higher than current levels in order to be developed economically.
Our ratings on Halcón incorporate assessments of business risk as vulnerable and financial risk as aggressive, and liquidity as adequate.
The stable outlook reflects our view that Halcón's leverage has stabilized after eliminating a major portion of its debt, post-bankruptcy. We estimate that the company's leverage will weaken significantly in 2017 after hedges roll off and remain above 4x debt to EBITDA and below 20% FFO to debt. We expect leverage to begin to improve in 2018, reflecting our higher oil price assumptions.
We would consider a downgrade if over the next 12 months the company's leverage falls to levels we would consider unsustainable or liquidity becomes less than adequate. Such a scenario would likely occur if Halcón significantly outspends internally generated cash flow or if commodity prices decline significantly.
We could raise the rating should the company successfully decrease operating costs and materially increases production and proved reserves while not materially increasing current leverage levels.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- UPDATE: JPMorgan Upgrades American Express (AXP) to Overweight
- Rennova Health Completes Asset Purchase Agreement of Scott County Community Hospital
- Bill Barrett Corporation (BBG) Entered Confidentiality Agreement with Bonanza Creek Energy (BCEI) Pertaining to BCEI's Chapter 11 Proceeding
Create E-mail Alert Related CategoriesCredit Ratings
Related EntitiesStandard & Poor's, Bankruptcy
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!