S&P: Weatherford notes BB-

S&P said it assigned a BB- rating and 3 recovery rating to Weatherford International Ltd.'s proposed $1.1 billion exchangeable notes due 2021, which includes a 15% over-allotment option.

The parent companies, Weatherford International plc and Weatherford International LLC, will guarantee the notes, but the notes will not have the benefit of upstream guarantees from Weatherford International plc's operating subsidiaries, the agency said.

The recovery rating of 3 indicates 50% to 70% expected default recovery.

The proceeds will be used to fund a proposed tender offer on various debt issues maturing between 2017 and 2020, which have a combined $2.9 billion face value, S&P said.

If the tenders are not consummated, the company will use proceeds to pay down other indebtedness, including outstanding borrowings under its revolving credit facility, the agency added.

The ratings on existing debt are unchanged, including the BB- rating and 3 recovery rating on the senior unsecured debt issued by Weatherford International LLC and Weatherford International Ltd.

Also unchanged is the BB+ rating and 1 recovery rating on the senior unsecured guaranteed revolver issued by Weatherford International Ltd., WOFS International Finance GmbH and Weatherford Worldwide Holdings GmbH, along with the BB+ rating and 1 recovery rating on the secured term loan issued by Weatherford International Ltd.

The ratings reflect the company’s satisfactory business risk profile, highly leveraged financial risk profile and adequate liquidity, S&P said.

The ratings also consider a view that Weatherford's market position and product and geographic diversity is stronger than its B+ rated peers in the oil and gas and other sectors, the agency said.

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