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Investing.com -- Fitch Ratings has revised Constellation Oil Services Holding S.A.’s outlook to positive from stable while affirming its ’B’ rating, citing improved contract performance and earlier deleveraging.
The rating agency maintained the company’s Issuer Default Ratings and 2029 senior secured notes at ’B’ with a Recovery Rating of ’RR4’.
The positive outlook reflects Constellation’s progress in securing new contracts at higher day rates, which supports earlier debt reduction and a shift to positive free cash flow in 2025, despite uncertainties in the global oil market.
As Brazil’s largest drilling rig operator with about 23% market share, Constellation maintains a backlog of approximately $2 billion. However, the company faces significant client concentration with 80% of its business tied to Petroleo Brasileiro S.A. (Petrobras).
Fitch projects Constellation’s EBITDA to reach about $190 million in 2025, rising to roughly $380 million in 2026 as contracts are repriced and utilization improves. The company’s net leverage is expected to decline from 2.4x in 2025 to below 1.0x by 2027.
Day rates are projected to average $252,000 in 2025 and increase to $315,000 in 2026, based on recent bids and signed contracts. The company is expected to generate positive free cash flow over the next three years, with capacity for dividend initiation from 2026.
Constellation’s ratings remain a notch below peers Seadrill Limited and Valaris Limited, which benefit from stronger liquidity profiles and broader market positions.
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