As of December 31, 2017, Diamond Offshore had long-term debt of $1.97 billion—compared to $1.98 billion in the previous year.
Diamond Offshore’s next bond maturity isn’t until 2023. More than half of the repayments are beyond 2039, which is almost 20 years from now.
Diamond Offshore has an untapped revolving credit facility of $1.5 billion, which will mature in 2020. The company has cash on hand of $376 million and current assets worth $886 million as of December 31, 2017—higher than its current liabilities of $223 million.
On October 18, 2017, S&P Global downgraded Diamond Offshore’s corporate credit rating to B+ from BB-. The B+ rating means “highly speculative,” while BB- means “non-investment grade.” S&P Global’s outlook for Diamond Offshore remains “negative.” On July 28, 2017, Moody’s Investor Services downgraded Diamond Offshore’s corporate credit rating to “Ba3” with a “negative” outlook from Ba2 with a “stable” outlook. Moody’s doesn’t expect a significant increase in day rates before mid-2019. There’s a higher risk of Diamond Offshore’s cash flow and credit metrics declining through 2019. Moody’s also stated that the negative outlook reflects the possibility of a downgrade if there isn’t a meaningful recovery in day rates. There could also be a downgrade due to weak oil prices and an oversupply of deepwater rigs.
Diamond Offshore has the highest credit rating among peers. In December 2017, Moody’s confirmed a “Caa2” rating on Seadrill Partners (SDLP). In January 2018, Moody’s downgraded Ensco’s (ESV) senior unsecured notes to “B3” from “B2.” Noble (NE), Transocean (RIG), and Rowan Companies (RDC) have credit ratings of “B3,” “Caa1,” and “B2,” respectively. To learn more about offshore drilling companies’ credit ratings, read The Offshore Drillers with the Highest and Lowest Credit Ratings.