S&P cuts KCA Deutag, loans, notes to B-

Standard & Poor's said it lowered its long-term corporate credit rating on KCA Deutag Alpha Ltd. to B- from B.

The outlook is negative.

At the same time, the agency lowered its issue rating on KCA Deutag’s $375 million term loan B maturing 2020, $375 million senior secured notes due 2021, $500 million senior secured notes due 2018 and revolving credit facilities (RCFs) totaling $175 million maturing in 2019-2020 to B- from B. The recovery rating on these instruments is unchanged at 3, reflecting an expectation of recovery in the lower half of the 50%-70% range in an event of default.

S&P said the downgrade reflects its more pessimistic view of KCA Deutag’s credit metrics and its ability to mitigate the effects of the market downturn, despite cost-cutting efforts and reduced capital expenditure (capex).

The agency anticipates that reported EBITDA will continue to weaken in 2016-2017 to about $200 million, the continuation of its decline to $260 million in 2015 from about $290 million in 2014. Cost-cutting measures are unlikely to cover the fall in revenue.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.