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Moody's downgrades ION Geophysical to B2, outlook negative

  • Moody's downgrades ION Geophysical's (IO -2.4%) rating to B2 from B3 and its $175M senior secured notes to Caa1 from B3 with a negative outlook.
  • Moody's cites "weaker fundamental performance than originally anticipated," which leaves the company with less financial flexibility to absorb changes in the "highly volatile and cyclical seismic sector, ... typically the first sub-sector in the oilfield services industry to decline in a down-cycle and the last sub-sector to benefit from an up-cycle recovery."
  • The firm also noted that ION's cash balance has eroded below projections while its "litigation exposure has increased." A Texas judge ordered ION to pay an additional $73.1M in damages to WesternGeco back in Oct.
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