S&P drops Overseas Shipholding outlook to negative

Standard & Poor's said it revised its outlook on Overseas Shipholding Group Inc. to negative from stable.

The agency said it affirmed the BB long-term corporate credit and senior unsecured debt ratings.

"The outlook revision reflects its expectations that, over the next year, earnings and cash flow will come under increasing pressure due to declining tanker rates caused by the sharp global economic slowdown and exacerbated by multiple production cuts by OPEC [an attempt to curtail the decline in crude oil prices]," said S&P credit analyst Funmi Afonja.

The agency added that Overseas Shipholding's revenue generation is subject to the volatile spot market that accounted for about 64% of revenues at Sept. 30, after taking into account the use of forward freight agreements to fix a portion of the revenues from the spot market.

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