S&P may cut Overseas Shipholding

Standard & Poor's said it placed the BB- long-term corporate credit rating and BB- issue-level ratings on Overseas Shipholding Group on CreditWatch with negative implications.

"The rating action on Overseas Shipholding Group reflects our concerns over the deterioration in the company's financial profile and the potential for further weakening, unless there is a meaningful and sustained recovery in tanker rates or the company pays down debt," S&P analyst Funmi Afonja said in a statement.

For the 12 months through Sept. 30, the company's debt-to-EBITDA ratio deteriorated to 12.2x, from 9.5x in the previous year, the agency said.

Ratings reflect the company's weakened financial profile due to significantly reduced earnings, caused by prolonged weakness in tanker rates and incremental debt from the ongoing vessel newbuild program, according to the agency.

Ratings also reflect the competitive nature of the shipping industry and the company's historically aggressive financial policy, characterized by significant share repurchases during 2007 and 2008, S&P noted.

Positive credit factors include adequate liquidity, a relative strong point in the company's financial profile and a well-established market position in the ocean transportation of crude oil and petroleum products, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.