Moody’s cuts Transocean, rates revolver Ba3, notes B1

Moody’s Investors Service said it assigned a Ba3 rating to Transocean, Inc.'s new $1 billion senior secured revolving credit facility and a B1 rating to Transocean Guardian Ltd.'s proposed senior secured notes due 2024.

Concurrently, Moody's downgraded Transocean's corporate family rating to B3 from B2, probability of default rating to B3-PD from B2-PD and senior unsecured notes rating to Caa2 from Caa1.

The agency also downgraded the ratings of Transocean's $1.25 billion senior unsecured notes due 2023 and $750 million senior unsecured notes due 2026 to B3 from B1.

The proceeds from the notes in combination with Transocean's cash will be used to refinance existing debt secured by Songa Offshore SE's Songa Encourage and Songa Enabler.

"The continued weakness in the offshore environment with relatively limited signs of recovery in drilling activity limits Transocean's ability to reduce its debt burden sufficiently to moderate its very high financial leverage," Sreedhar Kona, Moody's vice president, said in a news release.

"While Transocean has very good liquidity and a superior backlog, there are, as yet, few signs indicating a significant change in E&P companies' sentiment towards new investments in the offshore sector, and that contributes to our negative outlook."

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