Moody’s drops Stena, debt

Moody's Investors Service said it downgraded Stena AB’s corporate family rating to B1 from Ba3, probability of default rating to B1-PD from Ba3-PD and senior unsecured notes rating to B3 from B2.

Concurrently, the agency downgraded subsidiary Stena International SA’s senior secured notes rating to Ba3 from Ba2 and senior secured bank credit facility rating to Ba3 from Ba2.

The outlook on all ratings is stable. This action concluded the review for downgrade initiated on Feb. 9.

"We have downgraded Stena's corporate family rating to B1 to reflect our expectation that the company's financial profile will be materially affected when its offshore drilling contracts expire in 2016 and 2017. Our view considers the ongoing challenging pricing environment facing the sector and our expectation that market conditions will remain under considerable pressure when Stena has to renew its contracts," Marie Fischer-Sabatie, Moody’s senior vice president and lead analyst for Stena, said in a news release.

"While Stena has a diversified business profile that includes more stable activities, which will mitigate the negative effects on the drilling business, we still expect that its financial profile will weaken over a prolonged period of time. Therefore, Stena's ratings are more appropriately positioned at B1."

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