S&P rates RDS Ultra-Deepwater notes B-

Standard & Poor's said it assigned a preliminary B- rating to $260 million in senior secured notes due 2017 proposed by RDS Ultra-Deepwater Ltd.

RDS plans to use proceeds to purchase an offshore drilling rig, the agency said. The rating is contingent upon receipt of final documents.

The rating reflects exposure to re-contracting and refinancing risk given the notes' seven-year tenor versus the rig's five-year charter contract with Petroleos Mexicanos, S&P said.

The notes will be subordinated to a senior bank loan in both interest and principal payments, the agency added, and Petroleos Mexicanos could cancel the charter agreement.

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