Moody's upgrades Vantage Drilling

Moody's Investors Service said it upgraded Vantage Drilling International's corporate family rating to Caa1 from Caa3 and assigned a Caa1 rating to the company's proposed offering of $300 million first-lien senior secured notes.

The proceeds from the proposed offering will be used to repay the senior secured first-lien term loan borrowings, second-lien senior secured notes and also the closing installment for the acquisition of Soehanah jackup rig, Moody's said.

The proceeds will also be used to pay the accrued interest on the debt being repaid with the remainder to be used for general corporate purposes, the agency said.

Moody's also said it upgraded Vantage's probability of default rating to Caa1-PD from Caa2-PD and affirmed its SGL-3 speculative grade liquidity rating.

Moody's also changed the outlook to stable from negative.

The agency said it will withdraw the B2 rating on Vantage's senior secured first-lien credit facility, which is comprised of the first-lien term loan and first-lien letter of credit facility, after the issuance of the new $300 million first-lien senior notes and the planned full repayment of the first-lien term loan and withdrawal of letter of credit facility is completed.

The upgrades reflect the company's significantly reduced risk of default arising from a potential adverse action from the investigations into Vantage's alleged violations of the U.S. Foreign Corrupt Practices Act, enhanced liquidity and extension of debt maturities from the refinancing transaction, Moody's said.

While Vantage's ratings also benefit from modestly improved utilization and high quality fleet providing substantial asset coverage cushion, the company's relatively small scale and weak cash flows due to anemic industry conditions constrain the ratings, the agency said.

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