Moody's assigns PetroRio, notes B1

Moody's Investors Service said it assigned a B1 corporate family rating to Petro Rio SA and a B1 rating to PetroRio Luxembourg Sarl's planned up to $500 million guaranteed senior secured notes due 2026.

The B1 ratings are supported by PetroRio's small asset base and size of crude oil production, its high operating risk due to geographic concentration, the mature nature of its oil and gas assets and the high risk related to the dependence on acquisitions of oil and gas assets to maintain production or grow, the agency noted.

“These challenges are mitigated by PetroRio's high operating efficiency and cash generation, which supports low debt leverage and adequate interest coverage ratios for its rating category; high capital spending flexibility; favorable regulatory environment; and the fact that the company's capital is listed in the Brazilian stock exchange, which tends to strengthen corporate governance,” Moody’s said in a press release.

Proceeds will be used to refinance debt and for general corporate purposes.

The outlook is stable.

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