Moody's upgrades PGS

Moody's Investors Service said it upgraded the PGS ASA's corporate family rating to B2 from B3 and the probability of default rating to B2-PD from B3-PD and Petroleum Geo-Services AS' $450 million of backed senior secured Nordic bond rating to B2 from B3.

Concurrently, the agency placed PGS' CFR and PDR as well as Petroleum Geo-Services' bond rating on review for further upgrade. Previously, the outlook for both entities was stable.

“The rating upgrade to B2 reflects the company's improved liquidity and debt maturities profile after the closing of approximately $41 million of new equity raised from existing shareholders on Sept. 18, 2023 and the drawing of the $75 million term loan due in December 2026 that was raised in July 2023. The $138 million of stub term loan maturing in March 2024 has now been reduced to $69.8 million; Moody's now views PGS's liquidity to provide sufficient room to meet the March 2024 debt maturity,” the agency said in a press release.

The review for upgrade captures the Monday announcement that PGS and TGS ASA agreed to merge. The merger is expected to close in the second half of 2024, Moody’s said.

“Should the transaction close successfully, it is likely that the combined group CFR would have a better rating than PGS's B2 CFR because of the stated intention to refinance PGS's bond and to maintain a low leverage and strong liquidity going forward in line with TGS' conservative balance sheet profile,” the agency noted.

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