Moody's gives Caa1 to Songa notes

Moody's Investors Service said it assigned B2 corporate family and probability-of-default ratings to Songa Offshore SE and a Caa1 rating to its proposed $200 million senior unsecured notes due 2017.

The outlook is stable.

Proceeds will be used to improve Songa's liquidity profile by paying down all drawings under its bank revolver and increasing cash balances.

The B2 corporate family rating reflects Songa's focus on midwater drilling, including in the North Sea and offshore Australia that provide some barriers to entry, according to the agency. Existing contracts provide near-term revenue visibility and a net debt-to-EBITDA ratio of about 2.2x provides a solid equity cushion, the agency said.

The B2 rating also incorporates the company's exposure to oil industry cyclicality, limited track record and small asset base as well as potential additional external funding needed to address upcoming debt maturities, the agency noted.

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