Fitch affirms Transocean

Fitch Ratings said it affirmed Transocean, Inc.'s A- issuer default, senior unsecured debt and senior unsecured bank facility ratings following the announcement that the company's board of directors approved a plan to incur up to $2 billion of additional borrowings.

The outlook is stable.

Proceeds from the new borrowings will be used to reduce borrowings on the company's $1 billion revolving credit facility by $600 million and to finance up to $1.4 billion in accelerated repurchases under the company's existing $4 billion repurchase program. Repayment of the additional borrowings will be funded from the increased cash flows associated with the company's sizable contract backlog which will be generated over the next 12 to 24 months, the agency said.

The primary driver for the stable outlook is the relatively short period of time the borrowings are expected to remain outstanding accompanied by the relatively clear line of sight to the increased cash flows during the next 24 months, Fitch said. With a current contract backlog approximating $20 billion, the agency views the accelerated repurchase program as an acceptable method of rewarding shareholders while mitigating long-term risks to bondholders.

Debt to EBITDA is expected to increase to 3 times from 1.3 times.

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