S&P gives Vesta notes B

S&P said it gave Vesta Energy Corp.’s planned second-lien senior secured notes due 2026 preliminary B issue-level and 1 recovery ratings.

Vesta plans to offer the notes in exchange for its C$200 million of 8 1/8% senior unsecured notes due July 2023 at equivalent face value with a new higher coupon.

“We view this exchange as distressed, rather than purely opportunistic, given Vesta's tight liquidity and upcoming maturity. However, we don't consider it tantamount to a default because we believe investors are receiving adequate compensation for the extension in maturity,” S&P said in a press release.

The agency also placed its ratings on Vesta and the 2023 notes on CreditWatch with positive implications because it expects to raise the notes’ CCC+ rating, if any remain, to B- upon close of the transaction.

If the transaction is successful, S&P said it expects to raise issuer to CCC+ from CCC.

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