Moody's rates RAAM notes Caa2

Moody's Investors Service said it assigned a Caa2 (LGD 4, 61%) rating to RAAM Global Energy Co.'s proposed $150 million five-year senior secured second-lien notes and affirmed its existing Caa1 corporate family and probability of default ratings.

The outlook is stable.

The proceeds from the new notes will be used to repay borrowings under the company's revolving credit facility and to partially fund development and drilling activities

The agency said the Caa1 corporate family rating reflects RAAM's small scale, high concentration risk and high capital intensity property portfolio combined with significantly higher leverage following the new notes offering.

The Caa1 rating also considers the company's track record in establishing production in some very complicated areas of the Gulf of Mexico as well as its liquidity position, which provides some support for its aggressive drilling program, Moody's said.

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