Moody's rates EP Energy notes B1

Moody's Investors Service said it assigned a B1 (LGD5) rating to EP Energy LLC's proposed $800 million of notes due 2023, upgraded its senior secured second-lien term loans due 2018 and 2019 to Ba2 (LGD3) from Ba3 (LGD3) and senior unsecured notes due 2020 and 2022 to B1 (LGD5) from B2 (LGD5) and affirmed its corporate family rating at Ba3, probability of default rating at Ba3-PD and speculative grade liquidity rating at SGL-2. The outlook remains stable.

The proceeds from the proposed notes offering will be used to fund the tender offer of EP Energy's existing $750 million 6 7/8% senior secured notes due 2019 and to repay borrowings under its revolving credit facility.

The retirement of EP Energy's senior secured notes with unsecured notes reduces the amount of priority debt and increased the proportion of unsecured debt in the capital structure, resulting in the upgrade of the senior unsecured notes and the senior secured second-lien term loans.

The agency said EP Energy's Ba3 corporate family rating reflects its large and relatively diversified assets across four prolific onshore oil and natural gas basins in North America.

Offsetting its large scale, EP Energy's balance sheet is highly leveraged, Moody’s noted.

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