S&P drops MXEnergy to CCC+

Standard & Poor's said it lowered MXEnergy Holdings Inc.'s corporate credit rating to CCC+ from B and its senior unsecured rating to CCC-, and placed ratings on CreditWatch with negative implications.

The actions come after the company said it received a waiver from lenders under its credit facility to allow for an increase in the amount of letters of credit, according to the agency.

The lower rating is due to expectation that the company's liquidity position will deteriorate due to a decline in borrowing base, S&P said.

The CCC+ corporate credit rating reflects a vulnerable business risk profile and highly leveraged financial profile, the agency noted.

Risks include management's acquisitive nature, a highly leveraged capital structure, the lack of significant barriers to entry or any major competitive advantages in the retail marketing segment, the agency said.

Improved risk-management systems and policies, minimal counterparty credit risk along with the absence of a need to post collateral against mark-to-market fluctuations in hedging activities, and its focus on more stable residential and small commercial customers help temper the company's credit risks, S&P noted.

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