S&P lowers Abbot Group

Standard & Poor's said it lowered to B- from B+ the long-term corporate credit rating on Abbot Group Ltd. and removed ratings on Abbot and Turbo Alpha from CreditWatch, where they were placed with negative implications on Feb. 20.

The outlook is negative.

"The downgrades reflect our concerns regarding the effects on Abbot of what we consider to be deteriorating market conditions. Specifically, these concerns center on Abbot's tight covenant headroom and lower-than-expected deleveraging. Following the leveraged buyout by First Reserve Corp. in March 2008, Abbot had initial reported debt of $1.9 billion," S&P analyst Per Karlsson said in a statement.

"We believe that lower demand for oil and gas drilling operations will limit Abbot's ability to generate EBITDA, notably from 2010-2011 when the group's percentage of contracted revenues looks likely to decline."

S&P said that, given the abrupt worsening of market conditions, its believe that Abbot's debt-to-EBITDA ratios will likely remain very high, at 6x or more, in the coming years.

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