S&P downgrades Ultra Petroleum, debt

Standard & Poor's lowered the corporate credit rating on Ultra Petroleum Corp. to CCC- from B+, given the agency’s view that the company may look to restructure its debt over the next six months. The outlook is negative.

At the same time, S&P lowered its issue-level rating on the company structurally subordinated unsecured debt to C from B+.

“The rating action reflects our view that Ultra Petroleum's leverage and liquidity continue to deteriorate in light of our recently reduced commodity price deck and our estimate that the company will breach financial covenants on both its unsecured credit facility and senior unsecured notes at the end of the first quarter,” said S&P credit analyst Carin Dehne-Kiley in a news release.

The covenant breach would be considered an event of default and would accelerate maturities on $2.1 billion of outstanding debt (based on the $648 million outstanding on its revolver as of Sept. 30, 2015). As a result, S&P revised its assessment of liquidity to weak from less than adequate.

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