Moody’s: Rosetta on upgrade review

Moody’s Investors Service said it placed the Ba3 ratings of Rosetta Resources, Inc. under review for upgrade following news of a definitive agreement to be acquired by Noble Energy, Inc. in an all-stock transaction valued at $2.1 billion, plus the assumption of Rosetta’s $1.8 billion of net debt.

The review for upgrade is based on the potential benefit of Rosetta’s debt being supported by the stronger credit profile and greater financial flexibility of Noble, which has Baa2 ratings and stable outlook.

Under the definitive agreement announced May 11, Rosetta shareholders will receive 0.542 of a share of Noble common stock for each share of Rosetta common stock held, Moody’s said.

Following the transaction, the shareholders of Rosetta are expected to own 9.6% of the outstanding shares of Noble, the agency said.

Noble has not yet committed to guaranteeing the debt of Rosetta as part of the acquisition, Moody’s said, and may instead choose to either maintain Rosetta as a separate entity or tender for the notes.

The upgrade review will focus on the pro forma capital structure of the combined company, and whether the debt is guaranteed, the agency said.

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