Tullow - comment

S&P downgraded Tullow’s corporate rating to SD (selective default) as a result of the sub-par tender for the 2026 Senior Secured Notes.  We have previously highlighted that this was probable, but still believe Tullow are correct in pursuing their liability management program to deleverage their balance sheet.  S&P downgraded the Senior Secured Notes to D, default, and are likely to downgrade the Senior Notes (sub-2025) to a similar level once that tender is completed.  

Post the completion of the tender process, S&P are expected to reassess the ratings, balancing the now lower debt burden, improved maturity profile and better credit metrics versus the risk of further sub-par tenders in the future.  

Away from the ratings, this was undoubtedly the correct decision for Tullow to take advantage of the trading levels on its outstanding bonds.