OREANDA-NEWS. S&P Global Ratings lowered its rating on Odebrecht Offshore Drilling Finance Limited's (OODFL's) notes to 'CCC' from 'CCC+'. At the same time, we maintained the rating on CreditWatch with negative implications.

The downgrade reflects our belief that OODFL's financial flexibility has weakened and will likely further deteriorate as a result of lower CFADS in the upcoming 12-month period due to the termination of the charter and service contract for ODN Tay and the waiver the project obtained on the provisions governing the service agreement that capped operating expenses and capital expenses. The project has also obtained an additional waiver to use resources from reserve accounts to partly fund the Sept. 1, 2016, debt service payment.

We don't envision an imminent risk of default because cash flows from the three contracted assets and the reserve accounts should enable the project to keep operating for at least the next 6-12 months. However, the CreditWatch listing reflects the short-term risk of default on the potential acceleration of the bonds.