Hornbeck Offshore Services Inc. Rating Lowered To 'SD' Due To Debt Exchange

  • U.S.-based offshore vessel provider Hornbeck Offshore Services Inc. will complete a debt exchange where holders of a portion of its unsecured notes due 2020 exchange the debt for a new second-lien term loan due 2025.
  • Holders of $131.6 million of the notes will receive $111.9 million of the new loan.
  • We lowered our issuer credit rating on Hornbeck Offshore to 'SD' from 'CC' and our issue-level ratings on the company's unsecured notes due 2020 to 'D' from 'CC'.
  • The issue-level ratings on the company's senior notes due 2019 and 2021 remain 'D' and 'CCC' (recovery rating: '2'), respectively. The '2' recovery rating reflects our estimate of substantial (70%-90%, rounded estimate: 85%) recovery to creditors in the event of a payment default.
NEW YORK (S&P Global Ratings) Feb. 7, 2019—S&P Global Ratings today took the 
rating actions listed above. The downgrade follows Hornbeck Offshore Services' 
announcement of final results for its latest exchange offer, which we expect 
to settle on Feb. 7, 2019. The transaction will result in holders of $131.6 
million of its unsecured notes due 2020 exchanging the debt for a new 
second-lien term loan at 85 cents on the dollar. We view the exchange as 
distressed since the value received was less than the promise of the original 
securities and because we believed there was a realistic possibility of a 
conventional default before the exchange.

We expect to re-evaluate the company's issuer credit rating when we no longer 
believe there is a high likelihood of another distressed exchange.
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