Moody's to review Nabors ratings due to offering

NEW YORK—Moody's Investors Services said Thursday it placed its "A3" senior unsecured rating for Nabors Industries Ltd. under review for a possible downgrade after the oil and gas driller announced a senior notes offering.

The Bermuda-based company said Thursday one of its subsidiaries, Nabors Industries Inc., priced a $750 million, 10-year offering, at 6.15 percent interest.

"Despite strengthening North American drilling activity and expectations of escalating demand, Moody's is concerned with Nabors' increasing financial risk and the uncertainty regarding the ultimate use of proceeds from the offering," analyst Pete Speer said in a release.

Moody's said its review will focus on expectations for earnings, cash flow and capital investment for the second half of 2008 and into 2009. The ratings agency also said it will examine the prospects for lowering leverage and potential uses for proceeds from the offerings.

"This additional bond offering will further increase Nabors' leverage levels, which were already high for its 'A3' rating," Speer said.

Separately, Standard & Poor's Ratings Services affirmed its BBB+ rating on the notes themselves. S&P said Nabors' corporate rating remains at BBB+ and the outlook is stable.

Shares of Nabors fell $2.14, or 4.9 percent, to $41.41 in the afternoon session.