Standard & Poor’s downgraded Afren Plc on Wednesday, becoming the second major ratings agency (after Fitch) to warn of the oil producer’s imminent default.
“We downgraded Afren because it failed to pay its obligations under both its $300 million revolving credit facility (Ebok facility) and its bonds maturing in 2016 on time,” S&P said.
The agency also cut its long-term issue rating on Afren’s senior secured bonds maturing in 2016 to ‘D’ from ‘CC’. S&P said it cut its long-term corporate credit rating on Afren to ‘SD’, or selective default, from ‘CC’.
“We consider nonpayment of a debt obligation on the due date as a default, and we believe that Afren’s repayment of principal and interest within the grace period is unlikely,” S&P said.
Afren has lost more than 90 percent of its market value, or about 1.5 billion pounds ($2.3 billion), since the end of July, hit by a slump in oil prices, the dismissal of top executives and the absence of proven or probable reserves at an oilfield in Iraqi Kurdistan.
The company, which has most of its oilfields in Nigeria, is in talks with its largest bondholders over its immediate funding needs. It said last month that its liquidity was much lower than the $235 million it held in cash at end 2014.
Afren had about $1.15 billion in gross debt as of September.
Oil and gas producers across the globe have been hit by a sharp drop in crude prices that has forced many to slash spending.
Source: Reuters
