Moody’s cuts W&T offshore, notes; rates loan B2

Moody's Investors Service said it assigned a B2 rating to W&T Offshore, Inc.'s $300 million senior secured second-lien term loan B due 2020.

Ath the same time, the agency downgraded W&T's corporate family rating to B3 from B2, probability of default rating to B3-PD from B2-PD. senior unsecured notes rating to Caa1 from B3 and speculative grade liquidity rating to SGL-3 from SGL-2.

The outlook remains stable.

Net proceeds from the second-lien term loan were used to repay a portion of the drawings under W&T's existing senior secured revolving facility. As of March 31, the company had about $514 million drawn on a revolving credit facility with a borrowing base of $750 million. Pro forma for the second-lien term loan and reduction in the borrowing base to $500 million, the company would have had roughly $275 million of availability under the credit facility as of March 31.

"The second-lien term loan provides W&T with adequate liquidity to sustain its production levels," Moody's vice president Amol Joshi said in a news release.

"However, W&T's lack of hedges entering this low oil price cycle reduces retained cash flow. The downgrade to a B3 CFR reflects moderate leverage on production, but limited cash flow at a company increasingly focused on the challenging offshore deepwater environment."

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