On February 7, 2018, Moody’s Investors Service downgraded its rating on Jones Energy Holdings, LLC, including its corporate family rating to Caa2 from Caa1, probability of default rating to Caa2-PD from Caa1-PD and its senior unsecured notes rating to Caa3 from Caa2. “Jones Energy’s ratings downgrade reflects increased debt and a likely increase in structural complexity,” said Arvinder Saluja, Moody’s Vice President. “Given the likelihood that Jones’ assets in the Merge play will become unrestricted, the potential cash flows from their future production will be unavailable to service Jones’ debt.”
On February 8, 2018, Fitch Ratings downgraded the Long-Term Issuer Default Rating (IDR) of Jones Energy Holdings, LLC (JEH) and its parent, Jones Energy Inc. (JONE), to CCC from B-, JEH’s revolving credit facility rating to B from BB- and its senior unsecured notes rating to CCC- from B-. According to Fitch, the IDR downgrade reflects deterioration in key credit metrics including Debt/EBITDA and interest coverage, a sustained negative FCF profile, potential for liability management and potentially limited access to the bank funding when the revolving credit facility is paid off and replaced with a First Out Credit Facility as currently anticipated by JEH. Read more on distressed companies.