Moody’s Downgrades Peabody Energy as Met Coal Prices Continue to Decline

Mining Weekly reported that Peabody Energy (NYSE:BTU) has been downgraded by Moody’s in light of the persistently poor outlook for metallurgical coal prices.

As quoted in the publication:

Moody’s downgraded the St Louis, Missouri-headquartered company’s corporate family rating (CFR) to B3 from B2, which continued to reflect pressures on Peabody’s US thermal coal business from increased regulatory pressure and low natural gas prices.

“That said, Peabody’s rating reflects its significant size and scale, broadly diversified reserves and production base, efficient surface mining operations and a solid portfolio of long-term coal supply agreements with electric utilities. The rating also incorporates its competitive cost structure compared with other US-based producers, as well as operational risks inherent in the coal industry,” Moody’s added.

Further, the probability of default rating (PDR) was downgraded to B3-PD from B2-PD, the senior secured credit facility to B1 from Ba3 and second lien debt to B3 from B2, while the ratings on senior unsecured notes were downgraded to Caa1 from B3 and junior subordinated debenture to Caa2 from Caa1. Moody’s also changed the speculative grade liquidity rating to SGL-3 from SGL-2.

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