S&P downgrades Afren

Standard & Poor’s said it lowered the long-term corporate credit rating on Afren plc to SD (selective default) from CC.

The agency also said it lowered the long-term issue rating on the company’s senior secured bonds maturing in 2016 to D from CC.

S&P also said it affirmed the CC long-term issue rating on the company’s senior secured bonds maturing in 2019 and 2020.

The agency said it downgraded Afren because it failed to pay its obligations under both its $300 million revolving credit facility and its bonds maturing in 2016.

The company obtained from the lenders of the $300 million revolving credit facility a deferral of the $50 million amortization payment due Jan. 31 to Feb. 27, S&P said.

The agency also said it understands Afren is using a 30-day grace period under the bonds due 2016 to postpone payment of $15 million of interest due on Feb. 1.

The deferral of Afren’s debt payment obligations is tantamount to a default, the agency said, there is a high likelihood that Afren will fail to make the principal and interest payments in February.

Still, Afren has not defaulted on its other bonds maturing in 2019 and 2020, which account for more than 50% of its outstanding total debt, the agency said.

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