Fitch 10 Most Distressed LatAm Corp.'s: Constellation Insulated by Contracts; Downgrade Not Expected

CHICAGO--()--With the majority of QGOG Constellation S.A.'s (Constellation) contracts set to expire after 2018, the company's credit ratings should be able to withstand declining dayrates, according to the latest report in Fitch Ratings' 10-report series title '10 Most Distressed LatAm Corporates.'

One report will be released each day through Feb. 12th per the schedule found at the bottom of this release.

"As long as operating expenses are at or below historical levels, and fleet performance remains strong, Constellation can weather deteriorating dayrates declining to an average of USD300,000 for the ultra-deepwater rigs and USD150,000 for the midwater rigs without a downgrade," said Cinthya Ortega, Director.

We project that Constellation's free cash flow (FCF) and EBITDA will remain solid in 2016 and 2017. Fitch expects USD250 million of FCF and 4.2x of total net leverage in 2016, and USD327 million of FCF and 3.4x of total net leverage in 2017. As of the last 12 months ended September 2015, EBITDA was USD650 million.

Fitch's base case assumption presumes rigs will remain contracted and that Petrobras will not attempt to renegotiate contracted dayrates.

Fitch's 10 Most Distressed LatAm Corporates series will be released one report per day as follows:

Feb. 1st: Samarco Mineracao S.A.

Feb. 2nd: Companhia Siderurgica Nacional

Feb. 3rd: Pacific Exploration and Production Corporation

Feb. 4th: GOL Linhas Aeresas S.A.

Feb. 5th: Oi S.A.

Feb. 8th: GeoPark Latin America Limited Agencia en Chile

Feb. 9th: Ajecorp B.V.

Feb. 10th: TV Azteca, S.A.B. de C.V.

Feb. 11th: QGOG Constellation S.A.

Feb. 12th: Odebrecht Offshore Drilling Finance Ltd.

For more information, a special report titled 'QGOG Constellation S.A.' is available on the Fitch Ratings web site at www.fitchratings.com, or by clicking on the link.

Additional information is available at www.fitchratings.com

QGOG Constellation S.A. -- Scenario Analysis (Surfing Turbulent Waves)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=877104

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Contacts

Fitch Ratings
Cinthya Ortega
Director
+1-312-606-2373
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Cinthya Ortega
Director
+1-312-606-2373
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com