S&P cuts Energy XXI outlook to negative

Standard & Poor's said that it revised the outlook on Energy XXI (Bermuda) Ltd. to negative from stable and affirmed the B- corporate credit rating on the company.

At the same time, the issue rating on Energy XXI Gulf Coast Inc.'s $750 million 10% senior unsecured notes was affirmed at CCC+, with a recovery rating of 5, the agency added.

"The outlook revision reflects Standard & Poor's concerns regarding the company's tightening liquidity given current commodity prices, weaker future cash flows following the monetization of its hedges, potential reduction in its borrowing base as it goes through the next redetermination process in April 2009, and its aggressive leverage, which we expect to worsen with the softer commodity prices," said S&P credit analyst Aniki Saha-Yannopoulos.

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