S&P trims TechnipFMC, rates notes BB+

S&P said it lowered TechnipFMC plc to BB+ from BBB+ and assigned a BB+ rating with a 3 (65%) recovery rating to its new $1 billion of unsecured guaranteed notes due 2026.

Following the spin-off of 50.1% of its engineering and construction business and the planned sale of an additional stake to Bpfrance, TechnipFMC will have two primary business lines: subsea equipment and services (about 85% of pro forma estimated 2020 revenue) and surface technologies (about 15% of pro forma 2020 revenue). The company had a $7.6 billion backlog as of Sept. 30.

“Despite this strong backlog, TechnipFMC’s order intake declined by nearly 50% in 2020, and we expect its orders to be about flat over the next two years. In our view, most offshore projects are uneconomic at long-term oil prices below $50 per barrel, thus few offshore development projects are likely to move forward until oil prices substantially recover,” S&P said in a press release.

The outlook is negative.

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