S&P rates Drillships loans B+

Standard & Poor's said it assigned B+ ratings to the proposed $900 million senior secured term loan B1 due 2020 and the proposed $900 million term loan B2 due 2016 of Drillships Financing Holding Inc., a subsidiary of Ocean Rig UDW Inc.

The recovery rating on the proposed loans is 2, indicating 70% to 90% expected default recovery.

The agency also said it affirmed the 3 recovery rating and B issue ratings on Drill Rigs Holdings Inc.'s existing $800 million senior secured notes due 2017. The recovery rating of 3 reflects 50% to 70% expected default recovery.

Likewise, the recovery and issue ratings on the $500 million senior unsecured notes issued by Ocean Rig are affirmed at 6 and CCC+, respectively. The 6 recovery rating indicates 0% to 10% expected default recovery.

The proceeds of the new loans will refinance the existing outstanding $1.5 billion bank facilities, originally taken to finance the construction of drillships Corcovado, Olympia, Poseidon and Mykonos. Any remaining proceeds will be used for working capital purposes, fees and expenses, S&P said.

The proposed debt will benefit from a guarantee from parent company Ocean Rig and the subsidiaries of Drillships Financing Holding, as well as a pledge over the shares of Drillships Financing Holding and its subsidiaries, the agency said.

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