8-K

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT


                         Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

        Date of Report (Date of earliest event reported): March 25, 2004


                          McDERMOTT INTERNATIONAL, INC.
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             (Exact name of registrant as specified in its charter)


    REPUBLIC OF PANAMA                001-08430                  72-0593134
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(State or other jurisdiction         (Commission)              (IRS Employer
     of incorporation)                 File No.)             Identification No.)


1450 Poydras Street, New Orleans, Louisiana                      70112-6050
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 (Address of principal executive offices)                         (Zip Code)


Registrant's Telephone Number, including Area Code:  (504) 587-5400



Item 5. Other Events

On March 25, 2004, Moody's Investors Service downgraded the ratings of J. Ray
McDermott, S.A. ("JRM") to Caa1 from B3. McDermott Inc.'s ("MI") B3 senior
unsecured rating and parent company McDermott International, Inc.'s ("MII")
(P)Caa1/(P)Caa3/(P)Ca senior unsecured/subordinated/preferred stock shelf
ratings were not affected by the downgrade. The outlook for all the above
ratings remains negative. Moody's announced the downgrade in a release issued on
March 25, 2004. A copy of that release is furnished as Exhibit 99.1 to this
report and is incorporated by reference herein.


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                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                     McDERMOTT INTERNATIONAL INC.


                                     By: /s/Thomas A. Henzler
                                         ---------------------------------------
                                         Thomas A. Henzler
                                         Vice President and Corporate Controller

March 25, 2004


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                                INDEX TO EXHIBITS



Exhibit
Number                              Description
- -------        ------------------------------------------------------
            
99.1           Moody's Investors Service release dated March 25, 2004



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EX-99.1

                                                                    EXHIBIT 99.1

New York
John Diaz                                John C. Cassidy
Managing Director                        VP - Senior Credit Officer
Corporate Finance Group                  Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653


MOODY'S DOWNGRADES J. RAY MCDERMOTT, S.A.'S LONG-TERM RATINGS (Sr. Secured
to Caa1); RATING OUTLOOK REMAINS NEGATIVE

Approximately $200 million of Debt Securities Affected

New York, March 25, 2004 -- Moody's Investors Service downgraded the ratings of
J. Ray McDermott, S.A. ("JRM") to Caa1 from B3. The downgrade of JRM's ratings
was primarily driven by a continuing lack of liquidity and very weak financial
performance due to losses related to a large EPIC Spar project, a project in
Argentina, and an FPSO project. McDermott Inc.'s ("MI") B3 senior unsecured
rating and parent company McDermott International, Inc.'s ("MII")
(P)Caa1/(P)Caa3/(P)Ca senior unsecured/subordinated/preferred stock shelf
ratings were not affected by the downgrade. The outlook for all the above
ratings remains negative.

The downgrade reflects: (i) a continuation of cost overruns associated with
several JRM projects, including one that was not previously identified as a
potential problem contract, and (ii) ongoing deteriorating liquidity at JRM,
exacerbated by its failure to complete a new multi-year letter of credit
facility secured by a pool of accounts receivable.

Moody's is maintaining a negative outlook on JRM's ratings due to: (i) expected
severe liquidity constraints over the next several quarters, (ii) Moody's belief
that steps taken by management to improve liquidity and profitability are
limited, uncertain, and will likely take at least several quarters to realize,
and (iii) uncertainty related to the amount and timing of the ultimate negative
cash impact of the Spar projects, Carina Aries project, and Belanak project.

MI's and parent company MII's ratings were not affected by the downgrade. MI has
sufficient liquidity and has had a long history of stable, profitable
operations. MI's B3 rating already reflects liquidity constraints and
operational problems at its affiliate JRM. As of March 9, 2004, MII had
unencumbered cash of $37 million and MI had $74 million available under its $135
million three-year credit facility. The rating outlook for both MI and MII is
negative due to the continued uncertainty regarding the Babcock & Wilcox Company
asbestos settlement.


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JRM's recent, and fairly long history, of entering into long-term fixed price
contracts often leaves the company exposed to risks that lead to eroding profit
margins and/or losses, and several projects at JRM have been plagued with cost
overruns. In the fourth quarter of 2003, JRM recorded $64.7 million in pre-tax
charges on the Front Runner EPIC Spar ($10.9 million), Carina Aries ($24.6
million), and Belanak FPSO ($29.2 million) projects. Moody's notes only the EPIC
Spar projects and subsequently the Carina Aries project were identified by
management as problem contracts. This follows $19.9 million in pre-tax charges
for cost overruns primarily on its Font Runner Spar project in the third quarter
of 2003, $65.2 million in pre-tax charges for cost overruns on the three Spar
projects in the third quarter of 2002, $33.9 million in pre-tax charges for cost
overruns related to the same three projects in the second quarter of 2002, as
well as $313 million in non-cash charges for goodwill impairment in the third
quarter of 2002. In addition, in the first and second quarters of 2003, JRM
recorded pre-tax charges totaling $41.9 million related to the Carina Aries
project in Argentina. Management has made several changes at JRM and has
increased internal controls over project management and its bidding process,
which are expected to have a positive impact on JRM's future profitability.
However, given the company's poor track record and continuing operational
problems Moody's believes the realization of improved profitability in the
near-term remains uncertain, and Moody's continues to have concerns related to
the profitability of the current backlog. We believe additional charges over the
near term are possible.

Management has indicated that JRM will likely generate negative free cash flow
in three of four quarters during 2004, mainly due to losses associated with the
Front Runner Spar, Carina Aries, and Belanak projects. In order to fund the
negative cash flows, JRM issued $200 million of senior secured notes due 2013 in
December 2003, which are secured by certain marine construction vessels owned by
some of JRM's subsidiaries. However, approximately $84 million of the proceeds
of this issuance are currently being used to cash collateralize letters of
credit, with $22 million funding an interest reserve for the secured notes, and
$24 million funding other reserves, leaving JRM with only $58 million of
unencumbered cash on hand as of March 9, 2004. JRM's cash level is substantially
lower than Moody's had originally anticipated, representing a faster than
expected cash burn rate. JRM is currently negotiating a new multi-year letter of
credit facility secured by accounts receivable, available only to JRM, which is
expected to provide sufficient letter of credit availability to accommodate
JRM's activity levels over the near-term. JRM expects to complete this facility
in the first half of 2004. Completion of the facility would bolster JRM's
liquidity by releasing the cash currently pledged to collateralized existing
letters of credit. However, the facility, which was originally expected to be
completed by the end of 2003, has still not been finalized. To increase
liquidity over the near-term, the company is considering several alternatives
including the sale of selling non-strategic assets - which could provide cash to
fund certain capital expenditures. In addition, the company is seeking to
recover up to $25 million of the losses recorded in 2003 through change orders,
negotiated settlements, or legal proceedings; however, Moody's believes that the
timing of these recoveries, if any, remains uncertain. Other options the


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company is considering if the letter of credit facility is not completed,
include a receivables sales transaction with its parent, MII, who has $37
million in unencumbered cash on hand as of March 9, 2004. Nonetheless, the
company's ability to successful complete any or all of these actions in order to
improve liquidity in the near-term remains uncertain.

Ratings downgraded are: J. Ray McDermott, S.A.'s senior secured notes to Caa1
from B3, JRM's senior implied rating to Caa1 from B3, and JRM's issuer rating to
Caa1 from B3.

McDermott International, Inc., McDermott Incorporated, and J. Ray McDermott,
S.A.'s corporate headquarters are located in New Orleans, Louisiana.

Copyright 2004, Moody's Investors Service, Inc. and/or its licensors including
Moody's Assurance Company, Inc. (together, "MOODY'S"). All rights reserved.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH
INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER
TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR
SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER
OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.
All information contained herein is obtained by MOODY'S from sources believed by
it to be accurate and reliable. Because of the possibility of human or
mechanical error as well as other factors, however, such information is provided
"as is" without warranty of any kind and MOODY'S, in particular, makes no
representation or warranty, express or implied, as to the accuracy, timeliness,
completeness, merchantability or fitness for any particular purpose of any such
information. Under no circumstances shall MOODY'S have any liability to any
person or entity for (a) any loss or damage in whole or in part caused by,
resulting from, or relating to, any error (negligent or otherwise) or other
circumstance or contingency within or outside the control of MOODY'S or any of
its directors, officers, employees or agents in connection with the procurement,
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delivery of any such information, or (b) any direct, indirect, special,
consequential, compensatory or incidental damages whatsoever (including without
limitation, lost profits), even if MOODY'S is advised in advance of the
possibility of such damages, resulting from the use of or inability to use, any
such information. The credit ratings, if any, constituting part of the
information contained herein are, and must be construed solely as, statements of
opinion and not statements of fact or recommendations to purchase, sell or hold
any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS,
COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH


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RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM
OR MANNER WHATSOEVER. Each rating or other opinion must be weighed solely as one
factor in any investment decision made by or on behalf of any user of the
information contained herein, and each such user must accordingly make its own
study and evaluation of each security and of each issuer and guarantor of, and
each provider of credit support for, each security that it may consider
purchasing, holding or selling. MOODY'S hereby discloses that most issuers of
debt securities (including corporate and municipal bonds, debentures, notes and
commercial paper) and preferred stock rated by MOODY'S have, prior to assignment
of any rating, agreed to pay to MOODY'S for appraisal and rating services
rendered by it fees ranging from $1,500 to $1,800,000.


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