Moody's downgrades Aurelia Energy, Bluewater

Moody's Investors Service said it downgraded Aurelia Energy NV's corporate family rating to Ba3 from Ba2, Bluewater Holding BV's senior secured debt rating to Ba3 from Ba1 and Bluewater Finance Ltd.'s senior unsecured debt rating to B2 from B1. The outlook is negative. This concludes the review for possible downgrade begun on March 8.

The downgrade reflects the Aurelia Energy's weakened financial profile due to substantially increased debt levels following acquisitions and the expectation of continued debt-financed capital investment, the agency said. Bluewater's recently filed Form 20-F for 2005 revealed increased debt and weakened debt protection metrics, with total adjusted debt to EBITDA exceeding 5x.

Moody's said the negative outlook reflects greater execution risks over the next 18 months to 2 years associated with Bluewater's conversion of its Aoka Mizu hull into an floating production, storage and offloading vehicle (FPSO), given the inherent risk of cost overruns and delays in the development and modification of FPSOs, and Bluewater's experience of budget overruns in the past. In addition, Moody's said it believes the company may seek to maximize its growth potential from the currently favorable operating conditions in the FPSO market through opportunistic acquisitions of additional capacity.

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