Moody's downgrades Floatel

Moody's Investors Service said it downgraded Floatel International Ltd.’s corporate family rating to Caa1 from B2 and probability of default rating to Caa1-PD from B2-PD.

Concurrently, Moody's downgraded the rating on the company’s $650 million senior secured term loan B due 2020 borrowed by Floatel to Caa1 from B2. The outlook is negative.

Moody’s said the two notch downgrade of Floatel’s CFR to Caa1 reflects the company’s weak liquidity in the context of a challenging oil and gas environment, considering it still needs to obtain financing for the $270 million delivery payment of the newbuild Floatel Triumph in April 2016 and Moody's expectation that, following the recently announced delays of the 2016 contracts for the Floatel Superior and Triumph, the company might have tight financial covenants in 12-18 months if it cannot win any new contracts.

The company has stated that it already has equity financing in place but even if this is the case Moody's said it expects that it still requires financing of between $100 and $150 million.

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