Moody's: McDermott loan Baa3

Moody's Investors Service said it assigned a Baa3 rating to McDermott International Inc.'s new $950 million senior secured bank facility due 2016 and affirmed the company's Ba1 corporate family rating and Ba2 probability of default rating.

Moody's also said it withdrew the Baa3 rating on the company's prior $900 million senior secured facility due 2014, which has been replaced by the new facility.

The ratings reflect the company's leading position in offshore oil and gas engineering and construction, a niche market segment that has favorable long-term fundamentals, the agency said.

This engineering and construction industry segment is highly competitive and cyclical, Moody's said, and the company's large, fixed-price contracts are susceptible to cost overruns.

These risks are mitigated by its significant order backlog, late-cycle contributions, focus on project risk management and strong market position, the agency said.

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