Moody’s Investors Service booted a major future flow deal out of the investment-grade club today, downgrading three kinds of Class A notes of Petroleum Export Limited to ‘Ba1.’
With $622 million outstanding, the deal totaled $1.55 billion when issued in July 2005. The initial unwrapped rating from Moody’s was ‘Baa1’ — two of the classes of notes were then wrapped by MBIA and XLCA, respectively.
BNP Paribas, Merrill Lynch and Morgan Stanley were joint leads, with Morgan Stanley also acting as global coordinator and structuring adviser. Some 70% of the book consisted of U.S. investors, said a source at the time of placement.
The deal is backed by future deliveries of crude oil and naphtha by originator, The Egyptian General Petroleum Corp.
Moody’s sees the company as “a de facto government agency.” And as the future flow nature of the transaction implies it is linked to the originator’s rating, Moody’s concluded that the deal’s rating should be brought in line with the Egyptian government’s.
“The rating action has not been prompted by a deterioration in the performance and Moody’s notes that the transaction is currently performing as expected,” the agency added.