S&P cuts Diamond Offshore to CC

S&P said it downgraded the issuer credit and senior unsecured ratings on Diamond Offshore Drilling Inc. to CC from CCC+ on the strong likelihood of a selective default or Chapter 11 bankruptcy.

At the same time, S&P lowered the rating on its $950 million guaranteed senior unsecured credit facility to CC from B-, reflecting cross default provisions in the facility.

The outlook is negative as S&P said it expects to lower ratings to SD or D at the end of the grace period depending on the alternative chosen.

Diamond Offshore has missed the April 15 interest payment on its senior notes due 2039 and entered into a 30-day grace period with its lenders. The company has hired advisers to evaluate alternatives for its capital structure during the 30-day grace period.

“We believe this will result in either a debt restructuring we consider a selective default or a Chapter 11 bankruptcy filing,” S&P said in a news release.

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