Fitch Affirms Odebrecht Drilling Norbe VIII / IX Ltd., Series 2010-1 at
CHICAGO -- November 6, 2013
Fitch Ratings has affirmed the rating assigned to the 2010-1 notes issued by
Odebrecht Drilling Norbe VIII / IX Ltd. (Odebrecht Drilling) as follows:
--US$1,500 million 2010-1 notes affirmed at 'BBB'; Outlook Stable.
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 ultradeepwater (UDW) drilling rigs Norbe VIII and Norbe
IX. Odebrecht Oleo e Gas S.A. (OOG) is the sponsor of the transaction and
operator of the vessels. The transaction also benefits from a mortgage on both
Fitch's rating addresses the timely payment of interest on a semiannual basis
and ultimate payment of principal by legal final maturity. The outstanding
balance of the notes is US$1,387 million and the next debt service payment is
scheduled for December 30, 2013.
KEY RATING DRIVERS
The rating affirmation reflects (i) positive industry dynamics (ii) Petrobras'
credit quality in its role as ultimate offtaker of the vessels; (iii) the
stable uptime performances of Norbe VIII and Norbe IX and Fitch-adjusted debt
service coverage ratios (DSCRs) in line with expectations; and (iv) current
liquidity protections available for the transaction.
The Federal Government of Brazil and Petrobras have passed several initiatives
seeking the development of the local oil and gas industry. UDW rigs are
essential assets for continued research and development of new oil fields in
Brazil. Investments by Petrobras and regulation/legislation imposed by the
government should continue to provide a stable credit environment for sponsors
and protect the value of these assets. Petrobras carries local and foreign
currency issuer default ratings (IDRs) of 'BBB' with Stable Outlook.
From July 2012 through June 2013, Norbe VIII and Norbe IX each achieved
average uptime of 94.4%. Each rig may achieve bonus payments when uptime
performance exceeds 93%. Fitch expects both vessels to operate at 95% uptime
in the long run.
Fitch's adjusted semiannual DSCR, which considers total revenues and operating
expenses (opex) and scheduled principal and interest, averaged 1.22x for the
last two semiannual debt service payment periods, consistent with
expectations. The transaction DSCR, which considers total revenues, budgeted
opex, Offshore Mobilization Fee Account balances and scheduled principal and
interest, averaged 1.36x during the same period.
The transaction benefits from liquidity reserves equivalent to one semiannual
principal and interest amortization debt service payment and three months of
offshore operating and maintenance expenses on each vessel.
The transaction's rating may be sensitive to the operating performances of
Norbe VIII and Norbe IX and to changes in the credit quality of Petrobras.
Extended periods of downtime that cause Fitch to revise its expected uptime
assumption of 95% would result in lower DSCR expectations and could lead to
rating downgrades. Additionally, the foreign currency IDR assigned to
Petrobras acts as the implied cap to drilling rig transactions in which it
acts as offtaker.
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research:
--Global Structured Finance Rating Criteria (May 24, 2013);
--Odebrecht Drilling Norbe VIII/IX Ltd., Series 2010-1 (January 12, 2011).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
Odebrecht Drilling Norbe VIII/IX Ltd., Series 2010-1
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Cinthya Ortega, +1-312-606-2373
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
Gregory Lane, +1-312-606-2304
Greg Kabance, +1-312-368-2052
Elizabeth Fogerty, +1-212-908-0526 (New York)
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