Moody's Investors Service on April 13 downgraded all long-term ratings for Contura Energy Inc.
The action included a downgrade of Contura's corporate family rating from B3 to Caa1. Moody's also downgraded Contura's senior secured term loan rating from Caa1 to Caa2. Contura's outlook is rated "stable."
"Contura has idled the majority of its mines due to weak market conditions. Moody's expects that demand for metallurgical coal will weaken further in the near-term as blast furnace steel producers adjust to reduced demand due to the coronavirus," said Ben Nelson, Moody's senior credit officer and lead coal analyst. "The rating action is entirely driven by macro-level concerns resulting from the global outbreak of coronavirus."
The coal sector is one of the most significantly impacted sectors from the "severe and extensive credit shock" created by the pandemic, the Moody's note said.
"Moody's expects a very challenging year for the coal industry in 2020 — including meaningful reduction in industry-wide demand for metallurgical coal and thermal coal in the next few months driven by an unprecedented shock to the economy due to the coronavirus outbreaks," the note said.
The company's probability of default rating was downgraded to Caa1-PD from B3-PD.