S&P Global Ratings upgraded Transocean Ltd. (NYSE:RIG) to a B- corporate rating from CCC+ and removed the company from CreditWatch positive, assigning a positive outlook on the move. The ratings action reflects what S&P described as meaningful improvement in leverage and liquidity following a series of debt reductions and newly secured contracts.
Since February 2026 Transocean has added more than $1.6 billion to its contracted backlog and repaid nearly $520 million of secured debt. The company has reduced gross debt by $1.8 billion since the start of 2025. Included in that reduction was the full repayment in first-quarter 2026 of $358 million of 8.375% notes due 2028 that were secured by the Deepwater Titan rig.
S&P noted expectations that Transocean's funds from operations to debt ratio will climb into a 15% to 18% range over the next two years, reflecting the combined effects of lower absolute leverage and the contribution from new contract revenues.
Operationally, Transocean reported an average rig utilization rate of 87% in the first quarter of 2026, up from 72% in 2025 and 60% in 2024. The company achieved average dayrates of $475,000 during the period. These metrics, together with the backlog additions, were highlighted by S&P as supportive of the improved credit view.
On a liquidity basis, Transocean held $792 million as of March 31, 2026. That total comprised $330 million of unrestricted cash plus $462 million available under a previously undrawn $510 million revolving credit facility that matures in 2028.
In addition to the corporate rating move, S&P raised several issue-level ratings. The secured debt rating was lifted to B+ from B with a '1' recovery rating. Super priority and priority guaranteed notes were bumped to B from B- with a '2' recovery rating. Unsecured notes were upgraded to B from CCC+, and the recovery rating for those unsecured notes was revised to '2' from '3'.
Separately, Transocean agreed in early February 2026 to acquire Valaris Ltd. in a transaction consisting of $5.8 billion of stock plus the assumption of $1.1 billion of Valaris debt. The deal is expected to add $4.9 billion of contracted backlog to Transocean's portfolio and is slated to close in the fourth quarter of 2026.
Key points
- S&P upgraded Transocean's corporate rating to B- from CCC+ and assigned a positive outlook, citing improved leverage and liquidity.
- Transocean has added over $1.6 billion of backlog since February 2026, reduced gross debt by $1.8 billion since early 2025, and repaid nearly $520 million of secured debt since February 2026.
- Average rig utilization rose to 87% in Q1 2026 with average dayrates of $475,000; liquidity was $792 million as of March 31, 2026.
Risks and uncertainties
- The Valaris acquisition is expected to close in fourth-quarter 2026 - the timing and completion of that transaction remain subject to closing conditions.
- S&P's projection that funds from operations to debt will reach 15%-18% over the next two years is an expectation and could vary depending on future operating results and market conditions.
- Reported liquidity as of March 31, 2026 totals $792 million; future cash flows and access to the revolver could affect near-term liquidity.