Fitch rates KCA Deutag B+

Fitch Ratings said it assigned KCA Deutag Alpha Ltd. a first-time long-term B+ issuer default rating and a senior secured rating of B+ with an RR4 recovery rating. The outlook is stable.

“KCAD's B+ rating takes into account its geographically diversified operations with significant exposure to the Middle East, including Oman and Saudi Arabia, and Russia, where operations have proved to be more resilient during downturns compared with other regions. The rating also reflects KCAD's presence in onshore and offshore as well as its conservative leverage, sound liquidity and free cash flow (FCF)-generation capacity,” Fitch said in a press release.

However, Fitch noted the rating is constrained by KCAD’s limited track record of financial policy implementation following its restructuring, which involved a debt-for-equity swap, the oilfield services sector's high volatility, spare capacity and competition, the company's relatively modest scale and its status as largely a one-service provider (onshore and offshore drilling).

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