S&P: Golden State notes lowered, on watch

Standard & Poor's said it lowered its rating on Golden State Petroleum Transport Corp.'s $127.1 million secured term notes due in 2019 to BB- from BB+.

At the same time, the agency said it placed the rating on CreditWatch with negative implications.

The recovery rating remains unchanged at 4, indicating an expectation of an average recovery of principal if a payment default occurs.

The agency said the downgrade reflects an expectation of poor tanker market fundamentals coupled with an estimate of secondhand tanker values being lower than the current net debt outstanding on the Ulriken vessel. Golden State is earning a negative net margin on the vessel, drawing on its three-year debt service reserve and increasing the future break-even rate, the agency said.

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