Moody’s downgrades CGG

Moody’s Investors Service said it downgraded CGG SA’s corporate family rating to B3 from B1 and probability of default rating to B3-PD from B1-PD.

Moody’s also said it downgraded the ratings on CGG’s senior secured French revolving credit facility to Ba3 from Ba1 and the senior secured U.S. revolving credit facility issued by CGG Holding (U.S.) Inc. to Caa1 from B2.

The outlook remains negative.

The downgrades reflect the sustained deterioration of CGG’s performance over the last few quarters in the context of very challenging market conditions and expectations that the company’s credit metrics are unlikely to stabilize over the near term, the agency said.

As of June 30, the company’s leverage as measured by debt-to-EBITDA increased to 5.9x, which exceeds the indicated 5.5x level for potential downgrade pressure on the B1 corporate family rating, Moody’s said.

The agency also said it expects further deterioration of the cash-flows in the second half of 2015 and most likely in 2016 due to anticipated further upstream capital expenditure cuts by oil companies as crude oil prices remain low.

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