S&P upgrades Ausdrill

S&P said it raised the issuer credit rating on Ausdrill Ltd. to BB- from B+.

The agency also said it raised the ratings on Ausdrill Finance Pty Ltd.'s $300 million, senior unsecured and subordinated notes by one notch to BB- from B+ with the recovery rating remaining at 4.

S&P said it raised the ratings on Ausdrill Finance and Ausdrill International Pty Ltd.'s A$200 million secured syndicated bank loan by one notch to BB+ from BB with a recovery rating at 1.

The agency also said it raised the ratings to reflect an expectation that Ausdrill's new contracts, management of costs and increasing earnings will provide an enduring benefit to the company's credit metrics.

The outlook is stable.

In addition, Ausdrill recently raised A$100 million equity to fund its growth capital expenditure for new contracts, S&P said.

But the recovery in contract rates may be modest and slow as miners remain disciplined in containing operating costs, the agency said.

Miners are still cautious in expanding supply and committing significant capital expenditure to large greenfield projects, S&P said.

Ausdrill's exposure to the gold mining sector has somewhat shielded the company from reducing demand for work in other sectors like iron ore, coal or base metals, the agency said.

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