S&P assigns KCA Deutag B, notes B+

S&P said it assigned a B issuer rating to KCA Deutag Alpha Ltd. and a B+ to its new $500 million of senior secured notes due 2025.

KCAD completed the debt restructuring in December 2020 following the lock-up agreement it announced in July. “In early 2020, the Covid-19 pandemic and associated oil demand shock resulted in stressful market conditions for oilfield services companies. KCAD entered the crisis with overwhelming gross debt of about $2 billion,” S&P said in a press release. In a debt for exchange, KCAD cut its debt to about $500 million.

The agency said the B rating underscores its healthy credit metrics during the cycle's trough and its position in attractive oil and gas regions.

The outlook is positive. “The positive outlook reflects that we could upgrade KCAD in the coming six-to-12 months if it delivers positive free cash flow on the back of gradual market recovery and builds a financial policy track record,” S&P said.

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