Moody’s rates Seadrill loan B3

Moody’s Investors Service said it assigned a B3 rating to the super senior term loan issued by Seadrill Operating LP, a subsidiary of Seadrill Partners LLC.

Simultaneously, Moody’s downgraded the corporate family rating of Seadrill Partners to Ca from Caa3, the probability of default to C-PD/LD from Ca-PD/LD and the instrument rating of the senior secured term loan issued by Seadrill Operating to Ca from Caa3. The outlook remains unchanged at negative.

The B3 loan rating reflects its super senior status and smaller size in SDLP’s capital structure compared to the senior secured term loan and other payables. Moody’s said it expects the super senior term loan amount will likely increase over the next two quarters, instead of further missed interest payments for about $100 million on the term loan.

The downgrade to Ca of the CFR is because Moody’s does not believe Seadrill will be able to repay its senior secured term loan when it matures in February 2021, as well as potential low recoveries for lenders, the agency said.

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