Moody’s downgrades Azure, loans

Moody's Investors Service said it downgraded Azure Midstream Energy LLC's corporate family rating to B3 from B2, probability of default rating to Caa1-PD from B3-PD, senior secured term loan rating to B3 from B2 and senior secured revolving credit facility rating to Ba3 from Ba2.

The outlook was revised to negative from stable and the speculative grade liquidity rating was changed to SGL-4 from SGL-2.

"The downgrades reflect our view that Azure will continue to experience throughput volumes materially below minimum contracted levels through 2016, reflecting curtailed drilling activity of its two primary customers," Moody's vice president, senior analyst John Thieroff said in a news release.

"While the company is compensated for throughput deficiencies, the delayed nature of these payments along with the likelihood of reduced availability under its revolving credit facility in 2016 and required annual term loan amortization of $27 million strain the company's liquidity and threatens the company's ability to execute on its dropdown strategy."

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