Fitch Affirms Schahin II Finance Company (SPV) Ltd. Notes
CHICAGO -- March 19, 2013
Fitch Ratings has affirmed the following rating assigned to Series 2012-1
issued by Schahin II Finance Company (SPV) Limited:
-- US$750 million senior secured notes at 'BBB-'; Outlook Stable.
The notes are backed by the flows related to the charter agreement signed with
Petroleo Brasileiro S.A. (Petrobras) for the use of the dynamically positioned
ultra-deepwater drillship called 'Sertao' for the term of 10 years. Schahin
Petroleo e Gas S.A. (Schahin P&G), the oil and gas arm of Brazilian-based
Schahin Group (Schahin), is the operator of the vessel and primary sponsor of
the transaction. Charter collections include Residual Rights released from the
Cerrado transaction related to a similar rig operated by Schahin P&G.
KEY RATING DRIVERS
The rating affirmation reflects Sertao's uptime performance during the ramp-up
period; high expected debt service coverage for the transaction's first
principal and interest payment; current liquidity protections; the credit
quality and experience of the operator; the credit quality of Petrobras
('BBB'); and the continued development of Brazil's oil and gas industry.
Sertao began full-time operations in August 2012 after acceptance by Petrobras
in June 2012. The vessel has averaged a 94.9% uptime level during the
six-month period through January 2013, surpassing Fitch's expectations for
new-built rigs within the first six months of operation.
The transaction paid scheduled interest in September 2012 and is scheduled to
make its first principal payment of USD14 million at the end of this month.
Coverage is expected to be better than anticipated for this first amortization
due to Sertao's strong ramp-up performance, including lower than anticipated
In addition, the transaction benefits from liquidity reserves covering one
semiannual principal and interest payment, three months of operating expenses,
uptime performance ramp-up risks, and select penalties.
In its credit analysis, Fitch considers the strategic importance of the
Brazilian oil and gas industry, evidenced by Petrobras' robust investment
plans. Demand for existing drillships in Brazil is expected to remain strong.
The transaction's rating may be sensitive to movements in the credit quality
of Petrobras and the operating performance of Sertao and Cerrado.
Initial Key Rating Drivers and Rating Sensitivity are further described in the
New Issue report 'Schahin II Finance Company (SPV) Limited' published on April
Additional information is available at www.fitchratings.com. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (June 06, 2012);
--'Rating Criteria for Infrastructure and Project Finance' (July 12, 2012);
--'Schahin II Finance Company (SPV) Limited' (April 9, 2012).
Applicable Criteria and Related Research
Global Structured Finance Rating Criteria
Rating Criteria for Infrastructure and Project Finance
Schahin II Finance Company (SPV) Limited
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Fitch Ratings, Inc.
70 W Madison Street
Chicago, IL 60602
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