Moody's lowers J. Ray McDermott

Moody's Investors Service said it downgraded the ratings of J. Ray McDermott SA to Caa1 from B3.

Moody's said the downgrade of the company's ratings was primarily driven by a continuing lack of liquidity and very weak financial performance due to losses related to a large EPIC Spar project, a project in Argentina, and an FPSO project. McDermott Inc.'s B3 senior unsecured rating and parent company McDermott International Inc.'s prospective Caa1, prospective Caa3, and prospective Ca senior unsecured, subordinated, and preferred stock shelf ratings were not affected by the downgrade.

The outlook remains negative.

Moody's said the downgrade reflects a continuation of cost overruns associated with several J. Ray McDermott projects, including one that was not previously identified as a potential problem contract, and ongoing deteriorating liquidity at the company, exacerbated by its failure to complete a new multi-year letter-of-credit facility secured by a pool of accounts receivable.

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