S&P revises recovery on Dune notes

Standard & Poor's said it revised its recovery rating on Dune Energy Inc.'s $300 million second-lien notes to 4, indicating an expectation for average (30% to 50%) recovery in the event of a payment default, from 3. The CCC- issue-level rating on the notes as well as the company's CCC- corporate credit rating are unchanged.

The outlook remains negative.

The agency said the recovery rating revision is due to updated reserve information.

The ratings reflect the company's burdensome financial leverage and potentially precarious liquidity position, S&P said. In the agency's view, the company's heavy debt burden makes the prospects of a distressed exchange or bankruptcy a distinct possibility.

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