Moody's cuts Overseas Shipholding

Moody's Investors Service said it downgraded its corporate family, probability of default and senior unsecured debt ratings of Overseas Shipholding Group, Inc., each to Ba2 from Ba1.

The outlook is stable.

"The downgrades reflect Moody's belief that ongoing weak fundamentals of global tanker markets combined with the ongoing fleet diversification strategy are likely to prevent the restoration of Overseas Shipholding's earnings and operating cash flows to levels consistent with the Ba1 rating category over the near term," said Moody's analyst Jonathan Root.

The agency added that Overseas Shipholding has maintained higher financial leverage because of its expansive sector diversification strategy.

"This strategy has increased exposure to the international product carrier and U.S. Jones Act markets, each of which typically produces margins and returns on assets that are lower as compared to those generated by OSG's traditional crude vessels trading spot," continued Root.

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