Moody’s drops Oxbow Carbon, debt

Moody's Investors Service said it downgraded the ratings of Oxbow Carbon LLC, including the corporate family rating to B2 from B1, probability of default rating to B2-PD from B1-PD and the ratings on the second-lien debt to Caa1 from B3.

The ratings on the first-lien secured revolver and term loan were affirmed at B1.

The outlook is stable.

Moody’s said the downgrade reflects persistent weakness in the company's credit metrics as the company continues to face weak macro-economic conditions affecting energy and commodities companies.

In particular, the company's leverage as measured by debt/EBITDA (as adjusted by Moody's) stood at 5.6 times at Sept. 30.

The company obtained relief under its financial covenants, allowing for sufficient headroom over the next 12 to 18 months, and has consistently generated positive free cash flows.

Nevertheless, Moody’s said it expects that the leverage will remain above 5 times over the next several quarters, which is high for the rating category.

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