Fitch cuts Weatherford to junk

Fitch Ratings said it downgraded Weatherford International plc and its subsidiaries' long-term issuer default rating and senior unsecured ratings to BB from BBB-.

The outlook remains negative.

Fitch said the downgrade reflects its lower and longer services recovery profile assumption resulting in the forecasted leverage profile remaining above its through-the-cycle levels for a BBB-/BB+ credit over the rating horizon. The agency expects Weatherford's cash flow and leverage profiles to be significantly weaker than previously forecast.

Fitch's base case currently forecasts 2015 debt/EBITDA of 5.6 times compared to its previous April estimate of 3.2 times. The difference is mainly a result of less than expected debt reduction and lower activity and pricing pressure during the second half of 2015.

Leverage metrics are currently forecast to increase further to 6.4 times in 2016 with incremental oil and gas price-driven leverage metric improvements thereafter.

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