Moody’s cuts Atwood to Ba3, notes to B1

Moody's Investors Service said it downgraded Atwood Oceanics, Inc.'s corporate family rating to Ba3 from Ba2, probability of default rating to Ba3-PD from Ba2-PD and senior unsecured notes to B1 from Ba3.

The SGL-3 speculative grade liquidity rating was affirmed.

The outlook is negative. This action concludes the review that was initiated on Aug. 24.

"The downgrade reflects Atwood's limited revenue visibility beyond 2016, weak dayrate and utilization prospects at least through 2017 in a heavily oversupplied offshore rig market, and our expectation of a significant increase in financial leverage over the next two years driven by reduced earnings," Moody's assistant vice president and analyst Sajjad Alam said in a news release.

"The negative outlook reflects the contracting risk of Atwood's two new drillships (Atwood Admiral and Atwood Archer) that are due for delivery in 2016, as well as the re-contracting risk of its currently active rig fleet."

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