Fitch lowers Offshore Drilling

Fitch Ratings said it downgraded Offshore Drilling Holding SA’s long-term foreign- and local-currency issuer default ratings to B- from B+.

The outlook is negative.

Fitch also said it downgraded the rating on the company’s $950 million of senior secured notes to B- with recovery rating of RR4 from BB- with recovery rating of RR3.

The downgrade reflects heightened re-contracting risk for the company in light of Pemex’s marked reductions to its capital investment program, specifically the reduction in deepwater activities, the agency said.

This reduction in investments decreases the likelihood Pemex will continue requiring Offshore Drilling’s rigs in the short term and increases the company’s re-contracting risk once the renewed contracts start expiring toward the end of 2017, Fitch said.

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