S&P rates Eletson notes B

Standard & Poor's said it assigned a B long-term corporate credit rating to Eletson Holdings Inc.

The outlook is positive.

S&P also said it assigned a B rating to the proposed $290 million first-preferred ship mortgage notes due 2021 to be co-issued by Eletson and Eletson Finance (US) LLC.

The ratings reflect Eletson's weak business risk profile and highly leveraged financial risk profile, the agency said.

The ratings also consider the company's liquidity as less than adequate, S&P said.

The shipping industry has capital intensity, high fragmentation, frequent imbalances between demand and supply, lack of meaningful supply discipline and volatility in charter rates and vessel values, the agency said.

These weaknesses are mitigated by Eletson's position as a large independent operator in the product-tanker industry, its efforts to diversify into the attractive gas shipping segment, strong reputation as a quality operator and the company's long track record of commercial outperformance against industry benchmarks, S&P said.

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