Transocean's (NYSE:RIG) Rating Cut to "Baa3" by Moody's (NYSE:MCO)

Moody's (NYSE:MCO) cut the senior unsecured rating of Transocean (NYSE:RIG) from Baa2 to Baa3.

Moody's vice president Ken Austin, said in a statement, "The downgrade to Baa3 reflects Moody's view that Transocean potentially faces significant liability exposure due to its involvement in the blowout and subsequent oil spill from the Macondo well and a concern as to whether it will be fully protected under its indemnification from BP."

The short-term rating of the company was also downgraded from "Prime-2" to "Prime-3."

As of June 30, Transocean had close to $2.88 billion in cash on hand, and Moody's said with that, they could handle up to $6 billion in obligations if they had to.

If the obligations of Transocean exceed $6 billion, they would have to take on new debt to meet them, and that would hurt the company in relationship to retaining its investment-grade rating.