Moody's rates J. Ray McDermott loan B1

Moody's Investors Service said it assigned a B1 senior secured rating to J. Ray McDermott, SA's proposed $500 million senior secured credit facilities.

Moody's also said it placed the B2 senior secured rating of the company's $200 million 11% notes under review for possible upgrade.

The outlook is stable.

Moody's said these rating actions follow the company's announcement that it has begun a cash tender offer and consent solicitation for all of its senior secured notes. The proposed credit facilities are expected to close in early June concurrently with completion of the tender offer.

If investors do not tender 100% of the notes, the remaining outstanding notes will be upgraded to B1 from B2 once the proposed credit facilities have closed, the agency said.

Moody's said the B1 credit facilities rating further reflects the company's continued operating and financial improvement, its improved liquidity, management's disciplined approach to its project work and cost structure, and the company's growing backlog of work, providing increased visibility around near to medium term results.

However, Moody's noted that J. Ray McDermott's rating is restrained by its exposure to the large number of fixed price contracts in its backlog and by the low utilization of its construction yards leading to relative geographic concentration.

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