Moody’s cuts Schlumberger, ups Cameron

Moody's Investors Service said it downgraded Schlumberger Ltd.’s (SLB) issuer rating and the senior unsecured ratings of its guaranteed subsidiaries to A1 from Aa3, affirmed its Prime-1 short-term rating and changed the outlook to stable from negative.

The agency downgraded Schlumberger Holdings Corp.’s (SHC) issuer rating and senior unsecured ratings to A3 from A2 and its short term rating to Prime-2 from Prime-1, and changed the outlook to negative.

Additionally, Moody's upgraded Cameron International Corp.’s (CAM) senior unsecured notes ratings to A3 from Baa1 and withdrew the Prime-2 short-term rating.

These actions conclude the review for downgrade initiated on SHC's ratings on Jan. 21, and the review for upgrade initiated on Cameron's ratings on Aug. 26, 2015. The acquisition of Cameron by SLB closed on April 1.

"The downgrade of Schlumberger to A1 reflects the severity of the broader energy industry downturn and our expectation that the recovery in industry activity will be slow," Moody's senior vice president Pete Speer said in a news release.

“Schlumberger's cash flow based financial leverage will rise in 2016 and should decline thereafter, but the metrics are likely to remain at levels more consistent with an A1 rating."

"Schlumberger Holdings' downgrade to A3 incorporates the same industry challenges and its high debt levels following the CAM acquisition. The lower rating for this unguaranteed subsidiary reflects its higher stand-alone financial leverage that is partially offset by our expectations of parental support because of its strategic importance. The negative outlook highlights the importance of achieving its planned debt reduction over the next few years to support its A3 rating," Speer added in the release.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.