Moody’s ups Ithaca Energy notes to Caa1

Moody's Investors Service said it affirmed Ithaca Energy Inc.'s B3 corporate family rating and B3-PD probability of default rating and upgraded the senior unsecured notes rating to Caa1 from Caa2.

The notes are guaranteed on a senior subordinated basis by certain Ithaca subsidiaries.

The outlook on all ratings was changed to positive from stable.

Moody’s said the note upgrade reflects the reduced proportion of secured debt compared to unsecured debt in the capital structure, however, is one notch below the B3 corporate family rating, reflecting the secured liabilities ranking ahead of the notes in the capital structure.

The change of outlook to positive reflects the increase in production expected at around 18,000-19,000 BOE/day in 2017 from 9,310 BOE/day in 2016 following the start-up of production at Greater Stella Area (GSA) in mid-February this year. This should enable the company to generate positive free cash flow and result in deleveraging with adjusted debt/EBITDA at around 3 times to 4 times in 2017-2018 from 4.7 times in 2016.

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