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S&P downgrades Valaris to CCC+, outlook negative

S&P Global Ratings on Sept. 24 lowered offshore drilling services provider Valaris PLC's issuer credit rating to CCC+ from B- and its issue-level rating on the company's senior unsecured debt to B- from B, according to a Sept. 25 research update.

Ratings said the downgrade reflects its view that the company's capital structure has become unsustainable due to the slower-than-expected recovery in the offshore contract drilling industry. The rating agency estimated Valaris' debt-to-EBITDA to be close to 15x in the next 12 to 18 months, which will improve as demand for offshore drilling services recovers.

The negative outlook reflects the possibility of a downgrade if Ratings forecasts a specific path to default in the next 12 months. However, this scenario would most likely be the result of unfavorable market conditions, a deteriorated liquidity position or the risk of a debt exchange that Ratings sees as distressed.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.