Moody’s ups China Oilfield

Moody’s Investors Service said it upgraded China Oilfield Services Ltd.’s issuer rating to A3 from Baa1. In addition, Moody’s upgraded the senior unsecured debt ratings on the two notes issued under the euro medium-term note program to A3 from Baa1 and the unsecured debt rating on the bonds sold by COSL Finance (BVI) Ltd. and guaranteed by COSL to A3 from Baa1.

The upgrades mirror the agency’s estimate that company performance will continue to improve, and that leverage – as measured by adjusted debt/EBITDA – will stay around 3.5x-4x over the next 12-18 months, a level appropriate for its A3 rating, Moody’s said.

“The improvement in COSL’s operating performance is primarily driven by the strong capital spending of its parent, China National Offshore Oil Corp. (CNOOC, A1 stable), as COSL derived around 80% of its revenue during the first half of 2019 from CNOOC group companies. CNOOC has increased its capital investments in recent years under the Chinese government’s (A1 stable) policy direction to increase domestic oil and gas production and reserves, and on the back of the rebound in oil prices,” Moody’s said in a press release.

The outlook is stable.

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