Moody's: U.S. Oil & Gas Liquidity Stress at Worst-Ever Level
U.S. oil and gas companies, struggling with a steep fall in global crude prices, faced the worst-ever conditions to get cash to run their businesses, according to a report from Moody's Investors Service.
The rating agency said its "Oil & Gas Liquidity Stress Index" surged to a record high of 27.2 percent in February, surpassing a previous high of 24.5 percent touched during the last recession.
"The prolonged weakness in energy sector credit conditions is driving the sustained increase in the LSI," said John Puchalla, a senior vice president at Moody's.
The agency downgraded its ratings on 19 energy companies last month, 17 of which were exploration and production firms.
Moody's composite LSI jumped to 8.9 percent in February, from 7.9 percent in mid-January, and is now at the highest level since November 2009.
"This progression signals that the default rate will continue to rise as the year progresses," Puchalla said in a statement.
(Reporting by Arathy S Nair in Bengaluru)
