S&P Global Ratings on March 21 downgraded Murray Energy Corp.'s issuer credit rating to SD from CCC+, calling the coal producer's deeply discounted open market debt buybacks "tantamount to default."

Since the third quarter of 2018, Murray Energy has repurchased $48 million of its debt, including second-lien and 1.5-lien notes, at an average discount to par of 40%.

"We view these repurchases at less than the original promise as de facto restructurings given the company's weak credit profile," Ratings wrote.

Concurrently, Ratings lowered the issue-level ratings on the company's $294.7 million second-lien notes due 2021 and $490.7 million 1.5-lien senior notes due 2024 to D from CCC-. The issue-level ratings subject to the buyback could remain at D until restructuring is complete.

It also affirmed $1.59 billion B-2 and $159 million B-3 first-lien term loans due 2022 at CCC+, with an unchanged recovery rating of 3.

Murray Energy is expected to generate adjusted EBITDA of $750 million to $800 million in 2019, which Ratings said is sufficient to cover its interest, principal payments and capital expenditures. The company increased coal exports to 8.8 million tons in 2018, in an attempt to offset declining local coal demand.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.