(Alliance News) - Kosmos Energy Ltd was downgraded by Moody's Investor Service late Friday, with the oil company is set to face the "challenge" of lower commodity prices and the virus crisis.
The company's corporate family rating was nudged lower to B2 from B1, its probability of default rating was downgraded to B2-PD from B1-PD, and senior unsecured notes lowered to Caa1 from B2.
Moody's Senior Analyst Sajjad Alam said: "Sharply lower commodity prices will challenge Kosmos Energy's profitability and financial flexibility keeping leverage high and delaying its growth initiatives."
Oil prices plunged earlier in March after top exporter Saudi Arabia launched a price war in response to a failure by leading producers to strike a deal to support energy markets.
On Monday morning, Brent oil - the North Sea benchmark - was quoted at USD26.36 a barrel.
Moody's added: "The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented.
"The exploration and production sector has been one of the sectors most significantly affected by the shock given its sensitivity to demand and oil prices. More specifically, the weaknesses in Kosmos Energy's credit profile have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and the company remains vulnerable to the outbreak continuing to spread and oil prices remaining weak."
Kosmos Energy shares closed 11% lower at 68.00 pence each in London on Friday.
By Eric Cunha; ericcunha@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
Kosmos Energy (KOS)