Moody’s rates McDermott loan B2, cuts rating, view to stable

Moody’s Investors Service said it assigned a B2 rating to McDermott Technology (Americas), Inc.’s $1.3 billion term loan, which is part of the superpriority credit pact.

The agency also downgraded the company to Caa2 from B3, its probability of default rating to Caa2-PD from B3-PD, its senior secured credit facilities rating to Caa2 from B2, and its senior unsecured notes rating to Ca from Caa2.

The downgrade concludes the review began on Sept. 19, Moody’s said.

“The downgrade of McDermott’s ratings reflects the company’s much higher than anticipated costs to complete a few major problem projects, which has led to weaker than expected profitability and higher cash outflows. These issues have necessitated the pursuit of additional high cost financing to maintain adequate liquidity and will result in credit metrics remaining very weak.” said Michael Corelli, Moody’s vice president, senior credit officer and lead analyst for McDermott Technology.

Moody’s revised the outlook to stable from under review.

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