McDermott Closes $1.05 Billion Refinancing With Nordic Bond at Its Center
The Houston contractor's five-year secured bond placed in Nordic markets buys time on $1.3 billion in letters of credit expiring mid-2027.
McDermott International completed its refinancing on Monday (2026-09-21), raising $1.05 billion through a combination of equity and debt and pushing out a cluster of near-term maturities that had left the offshore engineering contractor financially exposed.2
The package has two main components. A $500 million rights offering tapped existing shareholders, while a $550 million five-year senior secured bond was placed in the Nordic market. Alongside those two instruments, the company also put in place a new long-term letter of credit and guarantee facility and a revolving credit facility of up to $100 million.2
The letter of credit facility is the more operationally significant piece. It refinances roughly $1.3 billion of outstanding letters of credit that were due to expire in June 2027 — a wall that would have forced a renegotiation under considerably less favorable conditions had the company waited.2
The balance sheet McDermott brought into this refinancing was tight. As of June 30, the company carried $5.74 billion in current liabilities, including an $89 million current portion of long-term debt. Current assets totaled $4.62 billion, meaning a gap of over $1.1 billion between what it owed near-term and what it held in liquid and near-liquid form. Cash and restricted cash together came to $850 million.2
Backlog of $15.8 billion as of June gives the company a long order horizon, and management will argue that provides the cash generation needed to service the new structure. But the revenue trend is moving in the wrong direction. Quarterly revenue fell to $2.33 billion for April-June 2026 from $2.51 billion in the same period of 2025 — a drop of roughly 7% year on year.2
The profit picture is cleaner. McDermott swung from a net loss of $86 million in Q2 2025 to a net profit of $41 million in Q2 2026. That recovery narrows some of the skepticism around the company's ability to service new debt, but a single profitable quarter after years of restructuring does not fully dispel it.2
The choice of the Nordic market for the secured bond is notable without being unusual. Nordic fixed-income investors have historically shown appetite for energy services paper, and placing a secured instrument there gave McDermott access to an investor base with existing familiarity with offshore project finance. The Houston-headquartered company has significant Middle East project exposure — the region is a core market for its engineering, procurement and construction work — and Nordic bond investors have long tracked that corridor.2
Middle East activity remains a variable. Service companies with exposure to the region have seen uneven order flow, with France's Viridien reporting oil and gas revenue down 46% year on year in a recent quarter, citing the Middle East as a drag. McDermott's own revenue decline over the same period points in a similar direction, even if backlog has held up.2,1
Operators broadly have been selective about sanctioning new work. Despite strong earnings — BP reported shareholders' profits of $7.8 billion in the first half of 2026, up from $2.3 billion a year earlier — supermajors have prioritized dividends and debt reduction over new project greenfield spending. That restraint in capital allocation puts service contractors like McDermott in the position of competing hard for a narrower set of projects even as their own balance sheets demand steady utilization.1
The refinancing does not resolve those structural pressures, but it removes the most immediate threat. McDermott now has runway to convert its $15.8 billion backlog into cash without a hard maturity forcing its hand in mid-2027. Whether that backlog converts at margins sufficient to cover the new debt service is what the next several quarters will answer.2
ICE Brent crude front-month traded at $99.26 per barrel on Tuesday (2026-09-22), down 0.58% on the session, while WTI front-month sat at $89.82 per barrel. Flat to lower crude is not an immediate threat to McDermott's near-term earnings — its revenue comes from fixed-price EPC contracts rather than commodity sales — but sustained weakness would eventually slow the final investment decisions that feed its order book.
The revolving credit facility of up to $100 million is thin relative to the company's balance sheet, and the gap between current assets and current liabilities remains wide even after the refinancing closes. McDermott's ability to stay within its new covenants while revenues trend lower is the number bond investors will be watching most closely over the next two quarters.2