Moody's ups Ocean Rig, notes, rates notes Caa1

Moody's Investors Service said it upgraded Ocean Rig UDW Inc.'s corporate family rating to B2 from B3 and probability of default rating to B2-PD from Caa1-PD.

Concurrently, the agency upgraded the ratings on the $800 million secured notes issued by Drill Rigs Holdings Inc. to B2 from B3, the $1.9 billion senior secured term loan borrowed by Drillships Financing Holding Inc. to B1 from B2 and the $500 million unsecured notes issued by Ocean Rig to Caa1 from Caa3.

Moody's also assigned a provisional Caa1 rating to the proposed $500 million senior unsecured notes issued by Ocean Rig due 2019.

The outlook remains stable.

"The upgrade reflects Ocean Rig's strong operational performance in 2013, with utilisation around 95%, and Moody's expectation that continued strong operating performance, as well as seven vessels on contract throughout 2014 and the Skyros starting in the first quarter, will lead to better credit metrics than our previous forecast, " Moody's analyst Douglas Crawford said in a news release.

"Moody's also views liquidity as benefitting from the covenant reset in the second half of 2013 and improved operating cash flow generation despite the negative implications of a possible master limited partnership formation later in the year."

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