Fitch lowers Transocean

Fitch Ratings said it downgraded Transocean, Inc.'s ratings to BBB+ and placed all the ratings on Rating Watch negative as a result of the company's announced merger with GlobalSantaFe Inc. and the company's plan to distribute $15 billion in cash to shareholders after the merger.

The agency lowered Transocean's issuer default rating to BBB+ from A-, senior unsecured to BBB+ from A- and senior unsecured bank facility to BBB+ from A-.

Fitch said it recognizes the added benefits of diversification and the significant contract backlog both companies secured as the market for offshore drilling rigs continues to improve.

But the move to borrow $15 billion for the benefit of distributing cash to shareholders is inconsistent with A ratings, the agency said.

Fitch said it would review the ratings for an additional downgrade, likely only one notch, based on expectations of a debt-to-EBITDA ratio exceeding 3 times.

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