S&P lowers Ultra Petroleum

S&P said it lowered its issuer credit rating on Ultra Petroleum Corp. to CC from CCC+. The outlook is negative.

At the same time, the agency lowered the issue-level rating on the company's unsecured debt to CC from CCC+. The recovery rating remains 3, indicating an expectation of meaningful (50%-70%; rounded estimate: 65%) recovery in the event of a payment default.

In addition, S&P affirmed the B issue-level rating on the company's secured debt term loan. The recovery rating remains 1, indicating an expectation of very high (90% to 100%; rounded estimate: 95%) recovery in the event of a payment default.

The downgrade follows the company's announcement that it has entered into privately negotiated exchange agreements with some holders representing a combined $823.5 million of its 6 7/8% notes due 2022 and of its 7 1/8% notes due 2025 for 9% cash and 2% PIK senior secured second-lien notes due July 2024 and warrants.

“The proposed exchange at below par value as well as the extension of the maturity led us to assess the value as less than the original promise,” S&P said in a news release.

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