S&P affirms McDermott

S&P said it affirmed its B+ corporate credit rating on McDermott International Inc. and removed the rating from CreditWatch, where S&P placed it with negative implications on Dec. 19. The outlook is stable.

At the same time, S&P affirmed its BB- issue-level rating on the company's $2.26 billion senior secured term loan due in 2025 issued by subsidiaries McDermott Technology (Americas) Inc., McDermott Technology (US) Inc. and McDermott Technology BV. The 2 recovery rating is unchanged, indicating an expectation for substantial (70%-90%; rounded estimate: 70%) recovery in the event of a default.

S&P also affirmed is B- issue-level rating on the company's $1.3 billion unsecured notes due 2024 issued by McDermott Technology (Americas) Inc. and McDermott Technology (US) Inc. The 6 recovery rating is unchanged, indicating an expectation for negligible (0%-10%; rounded estimate: 0%) recovery in the event of a default.

“The affirmation reflects our view that the additional debt issued to finance the combination with CB&I is offset by the resulting overall business risk improvement. We expect pro forma 2018 adjusted debt to EBITDA will be around 5x and FOCF to adjusted debt in the low-single-digit percent area, supported by a combined backlog of projects,” S&P said in a news release.

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