Moody's rates OMI notes B1

Moody's Investors Service said it has assigned OMI Corp. a B1 rating to the company's new $150 million senior unsecured notes due 2010. The outlook is stable.

Moody's said the ratings reflect the company's moderately high debt balance, the lack of unencumbered assets available for additional security, and the highly cyclical tanker markets in which the company operates.

The ratings also consider robust cash flow levels relative to capitalization, the company's focus on market leadership in key segments of the tanker shipping industry, asset values estimated to be in excess of pro forma debt levels, and OMI's long track record of stable growth and quality vessel management.

The ratings outlook is stable, reflecting expectations that the company can comfortably cover debt service requirements in the near term, even if tanker markets deteriorate significantly within the next two years.

Ratings may be subject to downgrade if the company were to use additional debt capacity to enter into a large acquisition of another company or fleet of vessels, or the company were to enter into a significant level of off balance sheet vessel acquisition or refinancing, which would diminish the company's free cash flow generation and credit fundamentals; or if the company's fleet were to encounter financial difficulty in unexpectedly prolonged weak markets, the agency said.

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