S&P downgrades EP Energy loan to B-

S&P said it lowered its issue-level rating on EP Energy LLC's priority-lien term loan due 2021 to B- from B and revised the recovery rating to 5 from 4.

S&P said the downgrade follows EP's announcement that it upsized its senior secured note issuance, which is senior to the term loan, to $500 million from $350 million.

As a result of the additional priority debt, recovery expectations for the priority-lien term loan fall to 5, indicating an expectation of modest (10%-30%, lower end of range) recovery in the event of a payment default, from 4.

As a result, the agency lowered the related issue-level rating to B- from B.

S&P said it used a company-provided midyear 2016 valuation of EP's reserves in its recovery analysis, computed at our recovery price deck assumptions of $50 per barrel West Texas Intermediate crude oil and $3 per mmbtu Henry Hub natural gas.

The recovery and issue-level ratings for the new senior secured notes, second-lien secured term loans and senior unsecured debt are unchanged. The B corporate credit rating and negative outlook are unaffected.

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