Rating Action:
Moody's downgrades Transocean's CFR to Caa1; negative outlook
23 Mar 2020
Approximately $9 billion of rated debt affected
New York, March 23, 2020 -- Moody's Investors Service, ("Moody's") downgraded Transocean Inc.'s (Transocean) Corporate Family Rating (CFR) to Caa1 from B3, Probability of Default Rating (PDR) to Caa1-PD from B3-PD, and senior unsecured notes rating to Caa3 from Caa2. Concurrently, Moody's also downgraded Transocean's senior secured revolving credit facility to B1 from Ba3, senior secured notes issued by various Transocean's subsidiaries to B2 from B1 and priority guaranteed senior unsecured notes (PGNs) to Caa2 from Caa1. Transocean's Speculative Grade Liquidity (SGL) rating was downgraded to SGL-2 from SGL-1. The rating outlook remains negative.
"The offshore sector's modest signs of improvement in 2019 did not significantly increase Transocean's contract backlog vis-a-vis its debt burden, and while dayrates have modestly improved, for some rig types and geographic markets, the appreciation has been considerably slower than expected. The commodity price collapse in the first quarter of 2020 poses a substantial challenge for the company to improve its cash flow outlook, as near-term improvement of offshore fundamentals is unlikely," commented Sreedhar Kona, Moody's senior analyst. "Transocean's very high financial leverage could worsen making its capital structure untenable."
