Fitch Affirms Odebrecht Drilling Norbe VIII / IX Ltd., Series 2010-1 at 'BBB'

CHICAGO--()--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$1,500,000 2010-1 notes affirmed at 'BBB'; Outlook Stable.

The rating affirmation reflects the forward-looking expectation of uptime performance and operating expenses (opex); the transaction's semiannual debt service coverage ratios (DSCRs) and current liquidity protections; and the continued positive environment for local content providers in the Brazilian oil and gas industry.

The notes are backed by the flows related to two charter agreements signed with Petroleo Brasileiro S.A. (Petrobras) for the use of the dynamically positioned ultra-deepwater drillships Norbe VIII and Norbe IX. Odebrecht Oleo e Gas S.A. (OOG), sponsor of the transaction, is the operator of the vessels. Deutsche Bank Trust Company Americas, as collateral agent to the transaction, has been assigned a collateral package that includes a pledge of the shares of the entities that own the drillships, as well as mortgages on them.

During the nine-month period through September 2012, Norbe VIII's average uptime level was 83.25%. The rig suffered 20 days of downtime in March due to an electrical failure. During the nine-month period through September 2012, Norbe IX's average uptime level was 98.7%. Fitch expected uptime performances to build from 80%-90% over the first 1.5 years and to average 95.0% after year 2. Based on the rigs' recent performance and the agency's understanding that Norbe VIII's electrical failure was an extraordinary event, Fitch anticipates future uptime performance to continue to meet expectations.

Transaction DSCRs as defined in the documents consider total revenues, Mobilization Fee account balances, and daily opex of up to USD135,000 for the first two semiannual payments. These DSCRs on a consolidated basis were 1.48x for December 2011 and 1.37x for June 2012.

The transaction benefits from the additional liquidity provided from reserves in a total amount equivalent to one principal and interest amortization, and six months of business interruption insurance in case uptime performance falls below expected levels.

In its credit analysis, Fitch considered the strategic importance of the Brazilian oil and gas industry, evidenced by Petrobras' robust investment plans. Demand for existing drillships in Brazil is expected to remain strong.

Additional information is available at www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--Global Structured Finance Rating Criteria (June 06, 2012);

--Rating Criteria for Infrastructure and Project Finance (July 12, 2012);

--Odebrecht Drilling Norbe VIII/IX Ltd., Series 2010-1 (Jan. 12, 2011).

Applicable Criteria and Related Research:

Rating Criteria for Infrastructure and Project Finance

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=682867

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923

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Contacts

Fitch, Inc.
Primary Analyst
Cinthya Ortega, +1-312-606-2373
Director
70 W Madison
Chicago, IL 60602
or
Secondary Analyst
Cristina Madero, +1-312-368-2080
Associate Director
or
Committee Chairperson
Greg Kabance, +1-312-368-2052
Managing Director
or
Media Relations
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

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Contacts

Fitch, Inc.
Primary Analyst
Cinthya Ortega, +1-312-606-2373
Director
70 W Madison
Chicago, IL 60602
or
Secondary Analyst
Cristina Madero, +1-312-368-2080
Associate Director
or
Committee Chairperson
Greg Kabance, +1-312-368-2052
Managing Director
or
Media Relations
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com