Fitch drops Odebrecht notes to BBB-

Fitch Ratings said it downgraded Odebrecht Offshore Drilling Finance Ltd.’s series 2013-1 senior secured notes due 2023 and series 2014-1 senior secured notes to BBB- from BBB.

The agency also downgraded Odebrecht Drilling Norbe VIII/IX Ltd.’s series 2010-1 senior secured notes due 2022 to BBB- from BBB.

The ratings were placed on Rating Watch Negative.

The Odebrecht Drilling Norbe VIII/IX notes are backed by the flows related to the charter and services agreements signed with Petroleo Brasileiro SA (Petrobras) for the use of the dynamically positioned ultra-deepwater drillships Norbe VIII and Norbe IX.

The Odebrecht Offshore notes are backed by the flows related to the charter and services agreements signed with Petrobras for the use of the dynamically positioned ultra-deepwater drillships ODN I and ODN II and the ultra-deepwater semi-submersibles Norbe VI and ODN Tay IV.

Fitch said the actions reflect: (a) Fitch's downgrade to Petrobras, offtaker of the transactions; (b) potential impact of the Lava Jato investigations on the sponsor's credit quality; (c) additional impact of the Lava Jato investigations on the transactions; and (d) the potential long term change in oil prices and asset values, which may increase the exposure to refinancing risk of both transactions and impact the re-chartering risk for ODN Tay IV and Norbe VI.

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