S&P cuts Diamond Offshore, debt to junk

S&P said it lowered its corporate credit rating on Diamond Offshore Drilling Inc. to BB+ from BBB.

The outlook is negative.

At the same time, the agency lowered its issue-level rating on the company's unsecured debt to BB+ from BBB and assigned a 3 recovery rating, indicating an expectation for meaningful (50%-70%; lower half of the range) recovery in the event of a payment default.

"The downgrade reflects our revised assessment of Diamond's business risk profile and our revised assumptions for utilization of the company's uncontracted fleet, in light of continued weak market conditions, resulting in higher leverage than we had previously anticipated in 2017 and 2018," S&P credit analyst Carin Dehne-Kiley said in a news release.

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