S&P applies BB+ to Transocean notes

S&P said it assigned its BB+ issue-level and 1 recovery ratings to Transocean Proteus Ltd.'s planned $625 million 6¼% senior secured notes due 2024.

The notes will be guaranteed by parent companies Transocean Ltd. and Transocean Inc., and by a wholly owned indirect subsidiary of the company.

The company expects to use proceeds to finance a portion of the cost of construction of the drillship Deepwater Proteus.

The 1 recovery rating reflects an expectation for meaningful (90% to 100%) recovery of principal for creditors in the event of a payment default.

The new notes will be secured by the Deepwater Proteus, which is under a 10-year contract with a subsidiary of Royal Dutch Shell plc at a favorable dayrate relative to current market conditions. The contract also includes termination fees.

S&P said the BB- corporate credit rating and negative outlook on Transocean, as well as the BB- issue-level and 3 recovery ratings on the company's senior unsecured debt, are unchanged.

The corporate credit rating reflects the agency’s assessment of the company's satisfactory business risk profile, aggressive financial risk profile and strong liquidity. It also incorporates Transocean's position as the largest global offshore drilling company and our view of its fleet's significant deepwater and midwater component as being less competitive during an industry downturn, S&P explained.

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