Moody’s cuts Trinidad Drilling, notes

Moody's Investors Service said it downgraded Trinidad Drilling Ltd.'s corporate family rating to B3 from Ba3, probability of default rating to B3-PD from Ba3-PD and senior unsecured notes rating to Caa1 from B1.

The speculative grade liquidity rating was lowered to SGL-3 from SGL-2.

The outlook is negative. This action resolves the review for downgrade that was initiated on Jan. 21.

"The downgrade reflects the anticipated decline in Trinidad's cash flow in 2016 and 2017 resulting from the collapse in drilling activity, which will result in debt to EBITDA metric rising toward 8x in 2017," Moody's analyst Paresh Chari said in a news release.

"Visibility for cash flow in 2016 is limited as Trinidad will only have 20% of its fleet under contract. We expect increased pricing pressure leading to margins being compressed as its contracted rigs transition to the spot market."

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