Moody's adds LD to Tullow

Moody's Investors Service said it appended a limited default designation to Tullow Oil plc’s Caa1-PD probability of default rating , changing it to Caa1-PD/LD. Moody's will remove the /LD designation from Tullow's PDR after three business days.

On June 12, Tullow launched a tender offer to buy a portion of its 7% backed senior unsecured notes due March 2025 and on Monday, the company announced that it had accepted for purchase around $166.5 million of the notes tendered resulting in a cash consideration of around $100 million. The notes repurchased will be retired and canceled, resulting in a $166.5 million reduction in unsecured debt. The deal was settled on Tuesday.

“Moody's views Tullow's bond buy-back as a distressed exchange. As such, the transaction constitutes a default under the rating agency's definition, which encompasses events whereby issuers fail to fulfill debt service obligations outlined in their original debt agreements, including buying back outstanding debt at a substantial discount to par,” the agency said in a press release.

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