OREANDA-NEWS. S&P Global Ratings today lowered its corporate credit ratings on Basic Energy Services Inc. to 'D' from 'CC'.

In addition, we lowered our senior secured issue-level rating to 'D' from 'CCC', and our senior unsecured debt ratings to 'D' from 'CC'. The recovery rating on the secured debt remains '1', indicating our expectation of very high (90%-100%) recovery in the event of a default. The recovery rating on the unsecured debt remains '4', indicating our expectation of average (30%-50%; lower half of the range) recovery in the event of a default.

"The downgrade reflects Basic's failure to make the coupon payment due under its 2019 notes within the 30-day grace period, and our belief that the company will likely elect not to meet its financial obligations to its debtholders until it has agreed on a financial restructuring plan with them," said S&P Global Ratings credit analyst Christine Besset.

Basic entered into a forbearance agreement through Sept. 28, 2016, with about 81% of the holders of the 2019 notes. The company's secured lenders have also agreed to provide temporary waivers of certain existing and future defaults under the company's term loan and asset-based facility related, in part, to the missed interest payment. We note that the company had $86 million of cash as of the end of June 2016, and that it expects to continue to meet its obligations to suppliers, customers, and employees.