After downgrading Transocean to SD last week, S&P has reversed its ratings on the driller and upgraded it to CCC. After exchanging its near term maturities for longer dated bonds due 2029, the rating agency is of the view that Transocean has enhanced its “liquidity runway” and has slightly more buffer to fulfill its upcoming debt obligations. Aside from debt exchanges, Transocean has extended its secured credit facility by two years to June 2025, albeit with reduced facilities of $774mn through June 2023 and $600mn through June 2025, from an initial quantum of $1.3bn. S&P estimates that the driller still has about $533mn of debt obligations in the next 12 months as well as $820mn of capex. While the rating agency thinks the driller can cover these, they have a very limited liquidity cushion. S&P continues to maintain a negative outlook on the firm, given its unsustainable leverage, significant maturities in the near term and the potential to initiate another distressed debt exchange in the next 12 months.
Transocean’s 9.35% 2041s are trading higher at 59.5, up by 0.75 points to yield 16.28%.