SAO PAULO & NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned the following rating to the notes issued by Odebrecht Offshore Drilling Finance Ltd. (the Issuer):
--USD1,690 million senior secured notes series 2013-1: 'BBB'; Outlook Stable.
Fitch's rating addresses the likelihood of timely payment of interest and principal on a quarterly basis, including the potential for two quarterly payment deferrals. Expected maturity is October 2022, with legal final maturity 12 months later.
The notes are backed by the flows related to the charter and services agreements signed with Petroleo Brasileiro S.A. (Petrobras) for the use of the dynamically positioned ultra deepwater (UDW) drillships called 'ODN I' and 'ODN II' for the term of 10 years and the UDW semi-submersible called Norbe VI, for the term of seven years. Odebrecht Oleo e Gas S.A. (OOG), oil and gas arm of Brazilian-based Odebrecht Group (Odebrecht), is the operator of the drilling rigs and primary sponsor of the transaction.
HSBC International Trustee Limited, as indenture trustee and collateral agent on behalf of the noteholders, has been assigned a collateral package that includes a pledge of the shares of ODN I GmbH (owner of ODN I and ODN II) and ODN Six GmbH (owner of Norbe VI), as well as mortgages on the rigs.
KEY RATING DRIVERS
Fitch considered the following factors in its credit analysis: the strategic importance of the Brazilian oil and gas industry, Petrobras' (Fitch Issuer Default Rating 'BBB') role as off-taker to the charter agreement, the quality of OOG as sponsor of the transaction and operator of the rigs, overall leverage and liquidity, and the structural protections in place, among other factors.
RATING SENSITIVITY
The expected rating is sensitive to changes in the credit quality of Petrobras, as offtaker to the charter and services agreements. The foreign currency IDR assigned to Petrobras acts as the implied cap to drilling rig transactions in which it acts as offtaker. In addition, the expected rating is sensitive to the operating performance of the rigs. Extended periods of downtime, which lead to the revision of Fitch's expected uptime assumption of 95%, would result in lower debt service coverage ratio expectations and potentially result in rating downgrades.
A detailed description of the criteria applied in the analysis is provided in Fitch's report titled 'Odebrecht Offshore Drilling Finance Ltd.', which is available at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'.
The information and documentation used to assess the rating was provided by Odebrecht Oleo e Gas S.A., Itau BBA Securities Inc., IHS Inc., ABSG Consulting Inc., and Okeanos BV.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 24, 2013).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=798784
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