S&P Global Ratings on July 1 lowered California Resources Corp.'s issuer credit rating to D from CC.

The rating agency also downgraded the company's $1 billion 1.5-lien term loan due 2021 and $1.3 billion first-lien loan due 2022 to D from CC; its second-lien notes due 2022 to D from CC; and its unsecured notes due 2021 and 2024 to D from CC.

The downgrade came after California Resources skipped interest payments on its 1.5-lien term loan due 2021, first-lien term loan due 2022, and 8% second-lien notes due 2022. Ratings noted that the downgrade reflects the probability that California Resources will fail to make the aggregate interest payments within the 30-day grace period as the company "pursues a comprehensive capital restructuring or bankruptcy filing."

The oil and gas producer has recently reached an agreement on an extension for forbearance agreements with certain lenders. Ratings said California Resources' continued discussions with debtholders could eventually lead to a possible bankruptcy.

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.