S&P rates Comstock notes CCC+

S&P said it assigned a CCC+ with a 3 recovery rating to Comstock Resources Inc.’s proposed offering of $400 million of senior unsecured notes. The 3 recovery rating indicates an expectation of meaningful (50%-70%; rounded estimate: 50%) recovery to creditors in the event of a payment default.

Comstock will repay revolver borrowings with the proceeds.

The agency placed all of Comstock’s ratings on CreditWatch with positive implications.

“The CreditWatch placement reflects the possibility of an upgrade following the close and funding of Comstock Resources’ unsecured notes offering. The debt issuance would significantly improve Comstock’s liquidity position, with pro forma revolver borrowings reduced to around $870 million (or less, if the deal is upsized), which equates to a 62% draw on the $1.4 billion borrowing base,” S&P said in a press release.

The agency said it expects to resolve the CreditWatch placements around when the transaction closes.

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