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Investing.com -- Moody’s Ratings has downgraded ProFrac Holdings II, LLC’s Corporate Family Rating to Caa1 from B2, reflecting deteriorating business conditions and weakening liquidity.
The rating agency also lowered ProFrac’s Probability of Default Rating to Caa1-PD from B2-PD, senior secured notes rating to Caa2 from B3, and Speculative Grade Liquidity Rating to SGL-4 from SGL-3. The outlook remains stable.
"The downgrade of ProFrac’s ratings reflect the company’s weak liquidity position amidst a deteriorating pressure pumping business environment," said Jake Leiby, Moody’s Ratings Senior Analyst.
The company used its revolver to cover cash requirements in the first quarter of 2025 and will likely need additional revolver borrowings for the remainder of the year. Rising debt amortization requirements have further strained liquidity.
ProFrac recently negotiated with lenders to reduce Alpine term loan amortization through the end of 2025 and plans to issue up to $60 million in additional secured notes due 2029 to owners and existing lenders to address liquidity needs through 2026.
The downgrade also reflects broader industry challenges, as U.S. onshore well completion activity has declined for two consecutive years. The first half of 2025 saw the lowest number of completed wells since 2021, reducing earnings for pressure pumping companies.
As of March 31, ProFrac had $16 million in cash and $66 million available under its secured ABL credit facility maturing in 2027. The company has indicated it could cut $70-100 million from its $275 million 2025 capital budget.
The secured notes due 2029 received a Caa2 rating, one notch below the CFR. These notes are secured by a first lien on ProFrac Services assets (excluding ABL collateral) and a second lien on ABL collateral.
Moody’s indicated that negative free cash flow, further liquidity deterioration, or distressed exchanges could lead to additional downgrades. Conversely, improved operating cash flow, enhanced liquidity, and steps toward a more sustainable capital structure could lead to future upgrades.
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