Moody’s cuts McDermott, revises view to negative

Moody's Investors Service said it lowered the corporate family and probability of default ratings for McDermott Technology (Americas), Inc. to B2 from B1 and to B2-PD from B1-PD, respectively.

In addition, the agency cut the ratings on senior secured credit facilities to B1 from Ba3, the senior unsecured notes rating to Caa1 from B3 and the speculative grade liquidity rating to SGL-3 from SGL-2.

“The downgrade of McDermott's ratings reflects the increase in costs to complete a number of projects and the lower than expected proceeds from asset sales. The weaker operating performance will lead to higher cash outflows and along with the lower asset sale proceeds will result in higher debt levels, weaker credit metrics and tighter near-term liquidity than previously expected,” said Michael Corelli, Moody's vice president, senior credit officer and lead analyst for McDermott Technology (Americas), Inc., in a press release.

“The downgrade also reflects the risk of further cost overruns considering the recent poor project forecasting by McDermott after its combination with CB&I,” Corelli said.

Moody’s revised the outlook to negative from stable.

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