S&P rates Floatel loan B

Standard & Poor's said it assigned a preliminary B long-term corporate credit rating to Floatel International Ltd.

The agency also said it assigned a preliminary B rating to Floatel's proposed $650 million term loan B. The preliminary recovery rating is 3, indicating 50% to 70% expected default recovery.

The outlook is stable.

The ratings reflect the group's weak business risk profile and highly leveraged financial risk profile, S&P said.

The ratings also consider its participation in the highly competitive and cyclical offshore oilfield services industry, limited diversification and relatively aggressive and largely debt-funded growth strategy, the agency said.

Geographic and customer diversification is limited due to the low number of vessels, but customers are largely blue-chip exploration and production companies, S&P said.

Relative strengths include Floatel's young, competitive, high-quality fleet, which leads to good earnings and cash flow visibility and reflects high demand for capacity, the agency said.

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