Moody’s cuts Comstock, debt

Moody's Investors Service said it downgraded Comstock Resources, Inc.'s corporate family rating to Caa1 from B3, probability of default rating to Caa1-PD from B3-PD, senior secured rating to B2 from Ba3 and senior unsecured rating to Caa2 from Caa1.

The SGL-3 speculative grade liquidity rating was affirmed.

The outlook is stable.

The downgrade is the result of the company's deteriorating cash flow metrics and high leverage.

"Comstock's strategic shift to return to a natural gas focus and the considerably lower margins that typically accompany gas production compared to oil will likely lead to scant coverage of the company's heavy interest burden in the near term," Moody's vice president John Thieroff said in a news release.

"While liquidity has been shored up through a $700 million secured notes issue in March and asset sales, the company will be challenged to grow production significantly to a level that supports its debt load."

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