S&P upgrades Ocean Rig to B

Standard & Poor's said it raised Ocean Rig Norway AS' long-term corporate credit ratings to B from B-, reflecting an improved contract structure, a large backlog and major refinancing planned over the next few months.

The outlook is stable.

Ocean Rig recently signed a new contract for one of its two semisubmersibles at rates the agency described as "very favorable." Accordingly, S&P expects a clear improvement in cash flow generation and, because the contract is in place, Ocean Rig will be able to use a fully underwritten seven-year bank facility of $1.04 billion to refinance existing bank debt and bonds.

The ratings continue to reflect the Ocean Rig's aggressive shareholder focus and high debt, S&P said, adding that the company's vulnerable business risk profile results from its low asset diversity with only two offshore drilling units and highly cyclical industry conditions.

However, the rigs are technically advanced fifth-generation units and the current structural shortage of semisubmersibles has enabled record contract day-rates that should provide strong profitability over the next three years, the agency added.

© 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.