S&P rates Ocean Rig notes B

Standard & Poor's said it assigned a B rating to the proposed $750 million senior secured notes due 2017 to be issued by Drill Rigs Holding Inc., a subsidiary of Ocean Rig UDW Inc.

The recovery rating on the proposed notes is 3, indicating 50% to 70% expected recovery in a default.

The recovery rating on the $500 million senior unsecured notes issued by Ocean Rig UDW remains unchanged at 6, reflecting 0% to 10% expected recovery in a default.

The recovery rating on the new notes is underpinned by their first ranking pledge over substantially all the assets of the issuer Drill Rigs Holdings Inc., including the drilling units Eirik Raude and Leiv Eirikson, which have a combined book value of $1.2 billion, S&P said.

The notes also benefit from a guarantee from Ocean Rig UDW and subsidiaries, the agency said.

The recovery rating is constrained by the uncertain jurisdictional exposure at the point of hypothetical default, as the rigs could be located in countries with weaker insolvency regimes, S&P said.

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