Moody's rates Offshore Group notes B3

Moody's Investors Service said it assigned a B3 rating to Offshore Group Investment Ltd.'s proposed $775 million senior secured notes. The company's other ratings remained unchanged.

The outlook is stable.

Net proceeds from the notes will be applied toward financing the approximately $800 million acquisition cost of Dragonquest, an ultra-deepwater drillship that is scheduled for an April 2012 delivery.

Moody's said Offshore Group's B3 corporate family rating reflects its small size, limited operating history and very high financial leverage. The rating also considers the capital intensive and highly cyclical nature of the offshore drilling industry, the short term nature of its jack-up rig contracts that limits revenue visibility, and the construction and financing risk involving the company's third drillship that is slated for a mid-2013 delivery.

The rating is supported by the company's high-quality assets and the company's short but good operating track record to date that have facilitated strong utilization and better-than-average dayrates. The rating is also underpinned by the long-term drilling contracts of Platinum Explorer and Dragonquest, Moody's said.

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