S&P cuts Diamond Offshore, debt to BBB

S&P said it lowered the corporate credit rating on Diamond Offshore Drilling Inc. and the issue-level rating on its unsecured debt to BBB from BBB+.

The outlook is negative.

"The downgrade reflects our revised assumptions for dayrates and utilization of Diamond's uncontracted fleet in light of continued weak market conditions, resulting in higher leverage than previously anticipated in 2017 and 2018," S&P credit analyst Carin Dehne-Kiley said in a news release.

"Although the company has taken steps to respond to the market downturn, such as reducing operating costs, reducing capital expenditures and cutting its dividend, we believe demand for offshore contract drilling services will remain depressed until at least 2018 and that the market is oversupplied with rigs."

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