Moody's downgrades OGX

Moody's Investors Service said it downgraded OGX Petroleo e Gas Participacoes SA's corporate family rating to B2 from B1, downgraded OGX Austria GmbH's $2.56 billion of 8½% senior bonds and $1.06 billion of 8 3/8% senior bonds to B2 from B1 and placed the ratings under review for further downgrade. Previously, the outlook was negative.

The agency said the downgrade is driven by continued low production flow rates from the company's initial offshore producing wells, negatively impacting capital productivity and cash flows.

The review for further downgrade reflects the concern over tightening liquidity over the next 12 to 18 months, with the expected need for OGX to pursue alternative liquidity options in order to build a healthy cash cushion through 2014, Moody's said.

The agency said OGX's B2 corporate family rating is supported by the company's large, world-scale resource base and is constrained by its still early stage development status.

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