Moody's: Mitsui O.S.K. outlook negative

Moody's Japan K.K. said it confirmed Mitsui O.S.K. Lines, Ltd.'s issuer rating at Baa3. The outlook is negative. This concludes the review for possible downgrade that began Aug. 4.

"Confirmation of Mitsui O.S.K.'s rating reflects primarily our view that, despite high leverage for the rating, the company has material flexibility to manage its operations and balance sheet as well as strong access to bank and alternate liquidity should it require," Moody's assistant vice president and analyst Mariko Semetko said in an agency news release.

"Furthermore, confirmation of the rating also reflects our view that while operating conditions remain tough, they are likely to improve rather than get appreciably worse and the recent fall in fuel prices will further assist in this regard."

The agency said the Baa3 rating reflects the company's strong operating profile and market conditions that are generally stable albeit at low levels, counterbalanced by the company's weak financial metrics.

The outlook is negative because the company's currently very high leverage – about 8.5 times as of Sept. 30 – is inconsistent with its rating and will result in a downgrade if the company does not improve its financial profile, Moody’s said.

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