Moody's drops MXenergy to Caa3

Moody's Investors Service said it downgraded MXenergy Holdings Inc.'s corporate family and probability-of-default ratings to Caa3 from B3 and its floating-rate senior notes due 2011 to Ca (LGD5, 78%) from Caa1 (LGD5, 77%). Ratings remain on review for further downgrade.

The downgrade reflects MXenergy's constrained liquidity profile and heightened risk of defaulting under its revolving credit facility over the near term, the agency said.

MXenergy's borrowing base availability has declined due to reduced natural gas prices, resulting in tightened liquidity needs as the company enters the winter heating season. The company relies on its credit facility for letters of credit that are essential to its operations, the agency said.

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