Standard & Poor's Rates Penn Virginia 'BB-'

NEW YORK (AP) — Standard & Poor's Ratings Services on Thursday assigned a "BB-" corporate credit rating to oil and natural gas company Penn Virginia Corp., saying U.S. natural gas producers face a challenging near-term outlook.

The rating is three notches into junk status.

The ratings agency said Penn Virginia's outlook was stable and also assigned a "BB-" rating to the company's proposed $250 million senior unsecured notes due 2016. It gave the debt a recovery rating of "3," indicating expectations for a meaningful — 50 percent to 70 percent — recovery of payment in case of a default.

Standard & Poor's assigned a "B'' rating — two notches below the the corporate credit rating — to Penn Virginia's existing $230 million 4.5 percent convertible senior subordinated notes due 2012. The agency gave that debt a recovery rating of "6," indicating expectations of negligible recovery in a default.

It said Penn Virginia has $534 million in debt, excluding debt at its partially owned master limited partnership, Penn Virginia Resources Partners LP.