Moody's Investors Service on Tuesday lifted multiple credit assessments for Transocean International Limited, moving the company's Corporate Family Rating to B2 from B3 while keeping the ratings on review for further upgrade. The agency also upgraded the Probability of Default Rating to B2-PD from B3-PD and raised the senior unsecured notes rating to Caa1 from Caa2.
Additional adjustments to the capital-structure ratings included an increase in backed senior unsecured ratings to B2 from B3 and to B3 from Caa1, and an upgrade of backed senior secured notes to Ba3 from B1. Moody's also revised the Speculative Grade Liquidity rating to SGL-2 from SGL-3.
Moody's said the rating moves reflect Transocean's material reduction in debt, better interest coverage and liquidity metrics, and a substantial contract backlog that extends through 2027. Despite the upgrades, the ratings remain on review for upgrade as Moody's incorporates the expected leverage improvement associated with Transocean's announced acquisition of Valaris Limited.
In February 2026 Transocean agreed to acquire Valaris in an all-stock deal valued at $6.2 billion, inclusive of Valaris's debt outstanding as of September 30, 2025, net of cash. The transaction is anticipated to close in the second half of 2026, subject to regulatory and shareholder approvals.
Moody's set pro forma expectations for the combined company at closing: debt/EBITDA in the 3.0x-3.5x range, with an additional improvement of about 0.5x when combined cash balances are included in the calculation.
The rating agency noted that, based on debt reductions already achieved and amounts Moody's expects will be retired by the end of 2026, roughly $2 billion of debt will be removed from Transocean's balance sheet. That deleveraging is projected to bring leverage to the low-4.0x range by year-end 2026, down from the low-6.0x range at year-end 2024. The reduction in debt is also expected to lower annual interest expense by approximately $200 million and lift interest coverage to the low-3.0x range.
Operationally, Transocean reported a revenue backlog of $7.1 billion as of May 4, 2026, and dayrates in the mid-$400,000 range.
On a liquidity and near-term cash flow basis, as of March 31, 2026, Transocean held $330 million of unrestricted cash and had an undrawn $510 million revolving credit facility maturing in June 2028. Moody's expects the company to generate about $600 million of free cash flow in 2026 after funding modest capital expenditures, and to direct that cash flow toward debt repayment.
Transocean faces roughly $600 million of debt maturities through 2027, which include approximately $200 million of scheduled amortization.
Moody's actions formalize the agency's view that recent deleveraging and a healthy contract backlog have strengthened Transocean's credit profile, while the pending Valaris acquisition and the company's execution on further debt retirements remain central to any additional rating upgrades.