Moody’s cuts Brazilian vessels

Moody's Investors Service said it downgraded the ratings of the senior secured notes of the following vessels to Ba1 from Baa3 on the global scale, maintaining the ratings under review for downgrade:

• Lancer Finance Co. (SPV) Ltd.: senior secured global notes due July 2016, about $80 million of debt affected;

• Schahin II Finance Co. (SPV) Ltd.: senior secured global notes due September 2022, about $675 million of debt affected;

• SBM Baleia Azul, SII/ Sarl: senior secured global notes due September 2027, roughly $400 million of debt affected;

• QGOG Atlantic/Alaskan Rigs Ltd.: senior secured global notes due July 2018, about $372 million of debt affected;

• Odebrecht Drilling Norbe VIII/IX Ltd.: senior secured global notes due June 2021, roughly $1,275,000,000 of debt affected; and

• Odebrecht Offshore Drilling Finance Ltd.: 6¾% and 6 5/8% senior secured global notes due in October 2022, about $2,151,000,000 of debt affected.

Moody’s said the actions reflect the increased liquidity risk associated with the deteriorating credit profile of Petroleo Brasileiro SA (Petrobras, Baa3/on review), the sole contractual off-taker and revenue source to service the outstanding debt issued by the listed entities.

On Jan. 29, the agency downgraded Petrobras' senior unsecured debt rating to Baa3 from Baa2, maintaining it under review for further downgrade. At the same time, Moody's lowered the company's baseline credit assessment to ba2 from ba1.

The downgrade reflects continued concerns about corruption investigations as well as significant liquidity pressure that could arise as a consequence of not providing timely financial statements. Petrobras' debt agreements include covenants for the provision of financial statements. Extended delays in providing financial statements carry the risk that creditors may take actions that could eventually lead to payment acceleration, the agency said.

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