S&P trims Transocean

S&P said it downgraded Transocean Ltd. to SD from CCC after the company exchanged $356 million of its existing 0.5% exchangeable bonds due 2023 (unrated) for $213 million of new 2.5% senior guaranteed exchangeable bonds due 2027. The new bonds will be guaranteed by Transocean Ltd. and three newly created subsidiary holding companies of Transocean Inc.

“In our view, the higher interest rate and additional guarantees are insufficient compensation to offset the extended maturity and 40% discount to par. In addition, the company is facing a high risk of conventional default over the near to medium term. Thus, we consider the transaction a distressed exchange and tantamount to default, and as a result, we lowered our issuer credit rating on Transocean to SD,” S&P said in a press release.

Other ratings are unchanged, S&P said.

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