S&P rates Transocean B-, cuts debt

S&P said it assigned its B- issuer credit rating to Transocean Ltd. The outlook is negative.

At the same time, the agency lowered its issuer credit rating on Transocean Inc. to B- from B.

In addition, the agency lowered the issue-level rating on the company's secured debt to B+ from BB-. The recovery rating remains 1, indicating high recovery (90%-100%; rounded estimate: 95%).

The agency also lowered its issue-level rating on Transocean's senior unsecured debt with subsidiary guarantees to B from B+. The recovery rating remains 2, reflecting substantial recovery (70%-90%; rounded estimate: 85%).

The agency also lowered its issue-level rating on the company's senior unsecured debt without subsidiary guarantees to B- from B. The recovery rating remains a 3, reflecting meaningful recovery (50%-70%; rounded estimate: 50%).

In addition, S&P lowered its issue-level rating on subsidiary Global Marine Inc.'s senior unsecured debt to CCC from CCC+. The recovery rating remains 6, reflecting negligible (0%-10%; rounded estimate: 5%) recovery.

“The downgrades reflect our view that demand for offshore contract drilling rigs and services, especially for deepwater rigs, will remain weak for the next 18-24 months, due to the higher costs, higher risks, and longer payback periods associated with offshore exploration and production relative to onshore unconventional projects,” the agency said in a news release.

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