S&P cuts Ocean Rig, subsidiaries, debt

Standard & Poor's said it lowered its long-term corporate credit rating on Ocean Rig UDW Inc. to CCC+ from B- and placed the rating on CreditWatch with negative implications.

At the same time, the agency lowered its issue ratings on:

• Drillships Ocean Ventures Inc.'s $1.3 billion term loan B facility to CCC+ from B. The 2 recovery rating was revised to 3, with recovery expectations at the higher end of the 50%-70% range;

• Drill Rigs Holdings Inc.'s $800 million senior secured notes to CCC+ from B-. The 3 recovery rating is unchanged, with recovery expectations at the lower end of the 50%-70% range;

• Drillships Financing Holding Inc.'s $1.9 billion term loan B facility to CCC+ from B. The 2 recovery rating was revised to 3, with recovery expectations at the higher end of the 50%-70% range; and

• Ocean Rig's $500 million senior unsecured notes due in 2019 to CCC- from CCC. The 6 recovery rating is unchanged.

All issue ratings were also placed on CreditWatch with negative implications.

S&P said the downgrades reflect its view that Ocean Rig's capital structure is unsustainable in the long-term and that its liquidity is currently less than adequate. The agency believes that customers' recent cancellations of rig contracts are a reflection of the rapid decline in oil prices and oil companies' consequent very high focus on reducing costs and capital expenditure (capex).

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