S&P rates Borr B+, notes BB-

S&P said it preliminarily assigned a B+ issuer rating to Borr Drilling Ltd. and a BB- rating to its planned senior secured notes.

“Our analysis considers Borr Drilling's relatively small size. With a current backlog of $1.9 billion versus $2.9 billion for Valaris, $2.4 billion for Seadrill, and $2.3 billion for Odfjell, and despite current revenue visibility of nearly two years with firm contracts in place, Borr Drilling remains exposed to volatile and unpredictable end markets where capital expenditure (capex) on oil and gas is the key driver. Mid- to long-term prospects are uncertain and volatile.

“In that context, Borr Drilling's relatively high indebtedness compared with that of peers, pro forma the proposed $1.5 billion debt issuance, is a relative weakness, despite our anticipation of rapid deleveraging once the two newbuilds are delivered (slated to happen before year-end 2024). That said, we note the additional $50 million equity injection, mandatory amortization, and cash flow sweep are supporting factors,” S&P said in a press release.

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