• Brazil-based oil rig investment company Sete failed to make payment on its bilateral bridge loan.
• We are lowering our global and national scale ratings on Sete to ‘SD’ from ‘B-‘ and ‘brB-‘, respectively. We are removing both corporate credit ratings from CreditWatch with nagative implications where we placed them on Feb. 13, 2015.
• We are also lowering our national scale issue-level rating on Sete’s debenture issuance to ‘brCCC’ from ‘brB-‘.
• We are keeping the issuance on CreditWatch with negative implications reflecting our view of a high likelihood of default on this obligation unless there is an unexpected positive development.

SAO PAULO (Standard & Poor's) March 23, 2015--Standard & Poor's Ratings 
Services lowered its global scale corporate credit rating on Sete Brasil 
Participações S.A. (Sete) to 'SD' from 'B-'. We also lowered the national 
scale rating to 'SD' from 'brB-'. At the same time, we removed both corporate 
credit ratings from CreditWatch with negative implications where we placed 
them on Feb. 13, 2015. At the same time, we are lowering the rating on Sete's 
R$1.85 billion debenture issuance to 'brCCC' from 'brB-'. We are keeping the 
issue rating on CreditWatch with negative implications.

The downgrade reflects Sete's declaration of default and subsequent nonpayment
on the $250 million bilateral bridge loan it has with Standard Chartered Bank.
The bank has sought the guarantee from Fundo de Garantia de Construção Naval 
(FGCN) and other existing cash collateral guarantees that should provide a 
very high recovery to the bank.

The CreditWatch placement on the rated debentures now reflects the higher 
short-term refinancing and debt acceleration risks. Although we believe the 
remaining existing creditors still have incentives to continue to refinance 
their loans until the long-term financing package is established (as the 
majority of these creditors are Sete's shareholders and benefit from the FCGN 
guarantee but not from the cash collateral), we also believe the refinancing 
and debt acceleration risks are much higher as the company faces challenges to
secure long-term financing. This is despite the fact that the rated 
debenture's principal and interest payment are due in 2018.