Fitch upgrades KCA Deutag notes

Fitch Ratings said it raised its rating for KCA Deutag UK Finance plc's senior secured notes to BB- from B+ and revised its recovery rating to RR3 from RR4 citing updated country-specific treatment of recovery ratings criteria and changed geographic split following the acquisition of Saipem SpA’s onshore drilling business.

Post-acquisition, Fitch said it estimates 70% of KCA’s onshore drilling revenue will be generated in Saudi Arabia, Oman, and Kuwait.

Concurrently, the agency revised its outlook for KCA Deutag Alpha Ltd. to positive from stable and affirmed the B+ issuer default rating.

“The outlook revision is driven by the company's improved business profile following its acquisition of Saipem SpA's onshore drilling business (Saipem Onshore Drilling) and our expectation that it will remain conservatively leveraged. We expect the company's EBITDA to substantially increase in 2023 and 2024, driven by the acquisition, improving utilization and firmer prices,” Fitch said in a press release.

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