Moody's revises Anton outlook to negative

Moody's Investors Service said it changed to negative from stable the outlook for Anton Oilfield Services Group's Ba2 corporate family and senior bond ratings. The ratings were affirmed.

"The negative outlook primarily reflects Anton's flat revenue growth and weakened level of profit margins, which have so far resulted in higher debt leverage in 2014," Chenyi Lu, a Moody's vice president and senior analyst, said in an agency news release. "The negative outlook also considers our view that the company will be negatively affected by the ongoing weakness in oil prices over the next 12-18 months."

Moody’s expects the company’s adjusted debt-to-EBITDA ratio to likely reach 4.5 times by the end of 2014, which is high for its Ba2 rating.

At the same time, Anton's Ba2 issuer rating is supported by its leading position in the domestic oil services sector in China, its diversified revenue base, its competitive technical edge in providing key signature services and its strategic alliance with, and technical support from, Schlumberger Ltd. (Aa3/stable), the agency said.

In Moody’s view, Anton's Ba2 ratings are constrained by its small scale and customer concentration, its weak operating cash flow due to its high working capital needs and increasing competition and execution risk from fast expansion.

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