Moody's rates Murray notes B3

Moody's Investors Service said it assigned a B3 rating (LGD3, 45%) to Murray Energy Corp.'s proposed $150 million add-on to its $540 million senior secured notes completed in October 2009 and April 2010, respectively.

The rating on the existing notes is being lowered to B3 from B2 due to the incremental increase in senior secured debt, as well as the absence of junior capital previously proposed.

Murray has B3 corporate family and probability-of-default ratings.

The company previously proposed to issue $150 million of senior unsecured notes, rated Caa2, which have now been canceled.

The outlook is stable.

Moody's said the B3 corporate family rating reflects high debt leverage, reliance on a few key coal mines, operating and geologic risk, and the absence of committed revolving credit.

Ratings are supported by long-standing relationships with highly rated utilities, long-term sales contracts, low-cost longwall mining methods, freight advantages associated with water-based transportation and proximity to customers, and a largely union-free work force, the agency said.

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