Moody’s downgrades Rowan

Moody's Investors Service said it downgraded Rowan Cos., Inc.'s corporate family rating to B2 from B1, probability of default rating to B2-PD from B1-PD and senior notes to B2 (LGD4) from B1 (LGD4). The speculative grade liquidity rating was affirmed at SGL-1. The outlook was changed to negative from stable.

The agency said the downgrade reflects Rowan's deteriorating credit metrics through 2018, resulting from low utilization rates and continued pressure on day rates. The negative outlook reflects the uncertain timing and magnitude of a recovery in the challenged offshore drilling market and its impact on Rowan's cash flow and credit metrics.

The rating is supported by Rowan's business profile, which is underpinned by its leading market position as a provider of premium jackup drilling rigs to the offshore market, and by its joint venture with Saudi Aramco, which is scheduled to begin in the third quarter of 2017 and should provide stable business over time, Moody’s said.

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