Moody's rates GulfMark notes

Moody's Investors Service said it assigned a B2 rating to Gulfmark Offhore's proposed $155 million senior unsecured notes and affirmed its B1 senior implied rating. Moody's also adjusted the ratings to B2 from B1 on GulfMark's 8.75% senior notes due 2008.

The outlook remains stable.

The proposed notes are senior unsecured, non-guaranteed, instruments similar to the existing 8.75% notes being repaid with the new note proceeds. However, a recalibration of GulfMark's senior unsecured note rating was warranted in order to notch the new notes down from the B1 senior implied rating to account for a lack of guarantees from subsidiaries that hold all but two of GulfMark's vessels.

Moody's said the ratings are restrained by the company's high leverage that resulted from a combination of undertaking a significant new build program just prior the latest downcycle; GulfMark's concentration in the mature and secularly weak North Sea market; and a weaker liquidity position.

Moody's added the ratings are supported by GulfMark's new build program which modernized its fleet and should benefit from higher earnings power upon an improvement in market conditions as well as provide enhanced asset values; GulfMark's increased diversification into more robust markets like Brazil and Southeast Asia as well as an entrance into an active Mexican market; and it's leading position in the North Sea market.

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