Fitch rates Offshore Drilling notes BB

Fitch Ratings said it expects to assign a BB rating to Offshore Drilling Holding SA's proposed $950 million senior secured debt issuance.

Fitch also said it assigned foreign- and local-currency issuer default ratings of BB- to the company.

The outlook is stable.

The proceeds will be used from the issuance to refinance existing debt at its Centenario and Bicentenario subsidiaries, Fitch said.

The one-notch uplift for the proposed debt issuance reflects the expected above average recovery given default as a result of the strong collateral provided to the noteholders, the agency said.

The ratings reflect the company's solid commercial relationship with Petroleos Mexicanos SA, as well as the relatively stable cash flow generation resulting from its contractual agreements, Fitch said.

The ratings also consider the nascent nature of ultra-deep water exploration in Mexico as well as the company's moderately high leverage, partial structural subordination and contract roll-over risk, the agency said.

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