Moody's: Overseas Shipholding view negative

Moody's Investors Service said it affirmed the Ba1 corporate family, probability-of-default and senior unsecured debt ratings of Overseas Shipholding Group Inc. and changed the outlook to negative.

The negative outlook reflects Moody's belief that the company is likely to sustain leverage at higher-than-current levels as 2009 unfolds. OPEC production cuts now approach four million barrels per day, and the agency believes this will likely reduce the number of VLCC cargoes by more than the market had anticipated, increasing downward pressure on spot freight rates.

Moody's said the affirmation of the ratings reflects Overseas' leading position in the crude segment of the tanker market and the potential of that segment to generate substantial operating cash flow over market cycles.

According to the agency, the ratings also consider the highly cyclical nature of the shipping sector and the pressure exerted on leverage and coverage metrics by Overseas' fleet growth, which it has increasingly financed with in-charters of vessels.

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