Moody's gives PGS bond B3, eyes upgrade

Moody's Investors Service said it assigned B3 rating to PGS ASA’s planned $450 million senior secured Nordic bond due 2027. PGS subsidiary Petroleum Geo-Services AS will issue the bond. The agency also placed PGS’ Caa1 corporate family rating and Caa1-PD probability of default rating on review for upgrade. The outlook before the review was positive.

The planned refinancing will be supported by $241 million of balance sheet cash to pre-pay the deferred export credit facility balance, which took place on Feb. 10, pay for the transaction fees and reduce the term loan balance, which was $738 million as of Dec. 31, due in March 2024 to $138 million; the existing $50 million super senior loan due in March 2024 (one-year extension option at company discretion) would remain in place.

The decision for the review was prompted by the launch of the refinancing of the senior secured term loan due in March 2024. “Based on the terms of the transaction as proposed, Moody's would likely upgrade PGS' CFR to B3 and its PDR for B3-PD, should the transaction close successfully. Based on this and the company's pro forma capital structure, Moody's assigned B3 rating to the PGS proposed first-lien senior secured bond,” the agency said in a press release.

“The partial refinancing of the existing senior secured term loan B would resolve the liquidity pressure that would have started to build up after September 2023 with the acceleration of the debt amortization,” Moody’s added.

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