Moody’s lowers McDermott

Moody's Investors Service said it downgraded McDermott Technology (Americas), Inc.'s corporate family rating to B1 from Ba3, its probability of default rating to B1-PD from Ba3-PD, its senior secured credit facilities rating to Ba3 from Ba2 and its senior unsecured notes rating to B3 from B2.

At the same time, Moody's affirmed McDermott's speculative grade liquidity rating of SGL-2.

The outlook is stable.

“The downgrade of McDermott's ratings reflects the substantial increase in costs expected to complete a few large projects and the negative impact this will have on the company's cash flows, liquidity and credit metrics,” Michael Corelli, Moody's vice president, senior credit officer and lead analyst for McDermott, said in a news release.

“It also reflects the risk of further cost overruns considering the recent poor bidding and project execution track record of CB&I prior to the combination with McDermott.”

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