Moody’s drops Shelf Drilling, loan

Moody's Investors Service said it took a number of rating actions on Shelf Drilling Midco, Ltd. and Shelf Drilling Holdings, Ltd.

The agency downgraded Midco's probability of default rating to Ca-PD from B2-PD and $350 million senior secured term loan to Caa3 from B3.

All ratings, including Midco's corporate family rating and Holdings’ $475 million notes, remain on review for downgrade.

Moody’s said the downgrade of Midco's probability of default rating to Ca-PD reflects the expectation that the amended and restated transaction support agreement the company entered into with its debt holders now suggests that the completion of a definitive transaction is likely and once completed will result in a distressed exchange for Midco's secured term loan holders.

The Caa3 rating on the term loan reflects an expected recovery rate within a range of 65% to 80%.

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