Moody's: EXCO view now developing

Moody's Investors Service said it changed EXCO Resources Inc.'s outlook to developing from stable.

Moody's said this action reflects the ratings implications for any of several major potential alternative strategic actions being evaluated by EXCO management and its private equity shareholders. The differences between the potential credit outcomes are substantial for each of the reported strategic alternatives.

EXCO currently has a B1 senior implied rating and B2 senior unsecured note rating. EXCO is wholly-owned by privately held EXCO Holdings Inc.

Moody's said EXCO's current ratings are affirmed. However, depending on the mix of transactions finally chosen and executed by EXCO, Moody's would anticipate either a ratings downgrade of from one to three ratings notches; a ratings confirmation; or a rating upgrade if EXCO executes one or more of the several acquisitions it is evaluating and satisfactorily equity funds the resulting funding needs.

If it becomes clear that certain acquisitions and related equity funding will not be forthcoming, the rating outlook would then either be changed to negative or the ratings would be placed under review for downgrade pending resolution of the remaining menu of potential strategic actions, the agency said.

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