Moody's rates EPE Holdings, EP Energy notes B3

Moody's Investors Service said it assigned a B3 rating to the proposed $350 million senior unsecured payment-in-kind toggle note offering by EPE Holdings LLC and EP Energy BondCo Inc.

Moody's also assigned Ba3 corporate family and probability of default ratings to EPE and withdrew the corporate family and probability of default ratings for EP Energy LLC.

EP Energy's Ba3 second-lien senior note rating and second-lien term loan rating and the B2 senior unsecured note rating were affirmed.

The outlook is stable.

"The issuance of debt by EPE to make a distribution to the equity holders is clearly a credit negative event," Moody's senior credit officer Stuart Miller said in a news release. "Despite the increase in debt, we did not change the existing ratings at EP Energy LLC as the incremental debt at EPE is structural subordinated and the toggle feature offers a degree of default protection to the existing lenders and note holders."

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