S&P cuts Ausdrill

Standard & Poor’s said it lowered its corporate credit rating on Ausdrill Ltd. to B+, from BB-.

At the same time, the agency said it lowered the ratings on Ausdrill Finance Pty Ltd.'s $300 million of senior unsecured and subordinated notes to B+ from BB-. The recovery rating is 4L (30%-50%, lower half of the range).

S&P also lowered its issue ratings on Ausdrill Finance and Ausdrill International Pty Ltd.'s A$125 million secured syndicated bank loan to BB from BB+. The recovery rating on this bank loan is also affirmed at 1.

"The downgrades reflect its view that a prolonged weakness in commodity prices has reduced demand for Ausdrill's services and that the company is likely to continue to face challenging conditions in the mining services sector, with no immediate prospect of recovery," S&P credit analyst Minh Hoang said.

"It also reflects its expectations that Ausdrill will no longer maintain credit metrics in line with the previous BB- rating."

In the agency’s view, decreased overall demand, reduced business activity, and lower mining investment have reduced Ausdrill's operating margins and somewhat weakened Ausdrill's business risk profile.

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