Moody's introduces new ratings

Moody's Investors Service has introduced two new ratings: probability-of-default ratings and loss-given-default ratings.

The agency's current long-term credit ratings are opinions about expected credit loss that incorporate both the likelihood of default and the expected loss in the event of default. The loss-given-default rating methodology will disaggregate these two key assessments in long-term ratings. The agency said the methodology will also enhance the consistency in its notching practices across industries and will improve the transparency and accuracy of its ratings, as Moody's research shows that credit losses on bank loans have tended to be lower than those for similarly rated bonds.

Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha-numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations.

Loss-given-default assessments (or LGDs) are assigned to individual rated debt issues - loans, bonds and preferred stock - and express Moody's opinion of expected loss as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0%-9%) to LGD6 (loss anticipated to be 90%-100%).

Below is a list of the rating actions for Moody's rated companies, sorted by industry. The rating immediately after the company name denotes the corporate family rating and the percentages next to the LGDs represent the expected loss-given-default rates.

North American oilfield service, refining and marketing

Allis-Chalmers Energy, Inc., B3; probability-of-default rating: B3; notes, B3, LGD4, 54%.

Alon USA Energy, Inc., B2; probability-of-default rating: B3; term loan, upgraded to B1 from B2, LGD2, 29%.

Basic Energy Services, Inc., Ba3; probability-of-default rating: Ba3; revolver, upgraded to Baa3 from Ba3, 12%; notes, B1, LGD4, 67%.

Calumet Lubricants Co., Ltd. Partnership, B2; probability-of-default rating: B3; term loan and letter-of-credit facility, upgraded to B1 from B2, LGD2, 26%.

Citgo Petroleum Corp., Ba1; probability-of-default rating: Ba1; revolver, term loan and bonds, upgraded to Baa3 from Ba1, LGD3, 31%.

Coffeyville Resources LLC, B2; probability-of-default rating: B2; revolver, delay-draw term loan facility and first-lien term loan, upgraded to Ba3 from B1, LGD2, 26%; second-lien term loan, B3, LGD4, 69%.

Complete Production Services, Inc., B2; probability-of-default rating: B3; revolver and term loan, B2, LGD3, 31%.

The Continental Group Cos., B3; probability-of-default rating: Caa1; revolver and term loan, B3, LGD3, 33%.

Dresser, Inc., B1; probability-of-default rating: B1; term loan C, upgraded to Ba1 from B1, LGD2, 14%; term loan, upgraded to B1 from B2, LGD3, 46%; notes, B3, LGD5, 79%.

Dresser-Rand Group Inc., Ba3; probability-of-default rating: Ba3; revolver and term loan, upgraded to Ba1 from Ba3, LGD2, 18%; notes, upgraded to B1 from B2, LGD5, 73%.

Frontier Drilling, B3; probability-of-default rating: B3; revolver, term loan and delayed-draw term loan, upgraded to B2 from B3, LGD3, 34%.

Hercules Offshore, Inc., B2; probability-of-default rating: B3; revolver and term loan, B2, LGD3, 34%.

The Babcock & Wilcox Co., revolver, term loan and letter-of-credit facility, upgraded to Ba2 from B1, LGD2, 19%.

J. Ray McDermott, SA, B1; probability-of-default rating: B2; revolver and letter-of-credit facility, upgraded to Ba3 from B1, LGD2, 24%.

Newpark Resources, Inc., B1; probability-of-default rating: B1; term loan, B2, LGD4, 59%.

Pride International, Inc., Ba1; probability-of-default rating: Ba1; notes, Ba2, LGD5, 71%; revolver, upgraded to Baa2 from Ba1, LGD2, 13%; senior unsecured shelf, prospective Ba2, LGD5, 71%; subordinated and preferred shelf, prospective Ba2, LGD6, 97%.

Tesoro Corp., Ba1; probability-of-default rating: Ba1; revolver, upgraded to Baa1 from Baa3, LGD2, 10%; notes, Ba1, LGD4, 57%.

Universal Compression, Inc., Ba2; probability-of-default rating: Ba2; revolver and term loan, upgraded to Ba1 from Ba2, LGD3, 36%; notes, upgraded to B1 from Ba3, LGD5, 88%.

Veritas DGC, Ba3; probability-of-default rating: Ba3.

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