SAO PAULO — Fitch Ratings expects to assign the following rating to the proposed issuance of notes by Odebrecht Offshore Drilling Finance Ltd. (the Issuer), a company setup in the Cayman Islands (Cayman):

–Up to USD1,880,000,000 series 2013-1 senior secured notes, ‘BBB(EXP)’; Outlook Stable.

Fitch’s expected rating addresses the likelihood of timely payment of interest on a quarterly basis and the timely payment of principal considering the potential for two quarterly principal payment deferrals. This expected rating does not incorporate Fitch’s full legal analysis as this process is currently ongoing and the final rating is contingent upon the receipt of final documents conforming to information already received.

The notes are backed by the flows related to the charter and services agreements signed with Petroleo Brasileiro S.A. (Petrobras) for the use of the dynamically positioned ultra deepwater (UDW) drillships called ‘ODN I’ and ‘ODN II’ for the term of 10 years and the UDW semi-submersible called Norbe VI, for the term of seven years. Odebrecht Oleo e Gas S.A. (OOG), oil and gas arm of Brazilian-based Odebrecht Group (Odebrecht), is the operator of the drilling rigs and primary sponsor of the transaction. The proceeds of the issuance will be used in large part to refinance existing loans attached to these rigs with the remaining portion to be used for general corporate purposes.

HSBC International Trustee Limited, as indenture trustee and collateral agent on behalf of the noteholders, will be assigned a collateral package that includes a pledge of the shares of ODN I GmbH (owner of ODN I and ODN II) and ODN Six GmbH (owner of Norbe VI), as well as mortgages on the rigs.

KEY RATING DRIVERS

The ‘BBB(EXP)’/Outlook Stable expected rating reflects the following key drivers:

Positive Industry Dynamics: The Federal Government of Brazil and Petrobras have passed several initiatives seeking the development of the local oil and gas industry. UDW rigs are essential assets for continued research and development of new oil fields in Brazil. Investments by Petrobras and regulation/legislation imposed by the government should continue to provide a stable credit environment for sponsors and protect the value of these assets.

Quality of the Sponsor: OOG is the largest Brazilian operator of UDW rigs chartered to Petrobras, with seven operating UDW rigs in its fleet. The company is controlled by Odebrecht S.A., a diversified conglomerate with significant financial flexibility and strong ties to Petrobras and the Federal Government.

Adequate Leverage and Refinance Risk: On a net debt basis, Fitch’s adjusted valuation of the rigs indicates an initial loan-to-value (LTV) of 63.5% and an average LTV of approximately 45% throughout the transaction’s life. Fitch expected case scenarios lead to average Debt-service coverage ratios of approximately 1.27x. A dividend retention mechanism will begin 46 months prior to the expected maturity date, bringing net debt LTV levels to 14%-18%, depending on valuation approach.

Rechartering Risk on Norbe VI: The existing charter and services agreements, currently combining to a day rate of US$347k/day, expire on June 2018. This exposure is mitigated by current market day rate levels, significantly above the current contract’s day rate; market forecasts on the supply and demand fundamentals for UDW rigs; the Petrobras exploration and production plans and the challenges to delivery of the 28 drilling rigs scheduled for 2016-2020; and the structural features embedded in the transaction.

Liquidity and Overall Structural Features: The transaction benefits from a six-month debt-service reserve account (covers two quarterly principal and interest payments) and a three-month operating expense reserve account, in addition to the requirement to hire business interruption insurance for a minimum period of 120 days. Events of default also contemplate the deferral of two quarterly principal payments, providing a window of approximately 12-months for foreclosure and sale of assets in case of cancellation of the charter and services agreements. The structure also contemplates a 12-month tail between expected and final maturity.

Additional drivers include (i) the ‘BBB’/Outlook Stable rating assigned to Petrobras’ foreign currency obligations; (ii) the conditionality and revocability of the charter and services agreements, such as extended periods of downtime or operator bankruptcy; (iii) the guarantees in place which allow foreclosure and sale of the assets in case of technical events of default; and (iv) the already operational nature of the rigs and consequent non-exposure to construction, delivery, or acceptance risks.

RATING SENSITIVITIES

The expected rating is sensitive to changes in the credit quality of Petrobras, as offtaker to the charter and services agreements. The FC IDR assigned to Petrobras acts as the implied cap to drilling rig transactions in which it acts as offtaker. In addition, the expected rating is sensitive to the operating performance of the rigs. Extended periods of downtime, which lead to the revision of Fitch’s expected uptime assumption of 95%, would result in lower debt service coverage ratio (DSCR) expectations and potentially result in rating downgrades.

A detailed description of the criteria applied in the analysis will be provided in Fitch’s presale report titled Odebrecht Offshore Drilling Finance Ltd.’ available shortly at ‘www.fitchratings.com’.

Additional information is available at ‘www.fitchratings.com’.

The information and documentation used to assess the rating was provided by Odebrecht Oleo e Gas S.A., Itau BBA Securities Inc., IHS Inc., ABSG Consulting Inc., and Okeanos BV.

Applicable Criteria and Related Research:

–‘Global Structured Finance Rating Criteria’ (June 6, 2012).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=792062

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