Moody's cuts Overseas Shipholding view to negative

Moody's Investors Service said it confirmed the ratings of Overseas Shipholding Group Inc., including the senior unsecured and senior implied ratings at Ba1, and changed the outlook to negative from stable.

Ratings confirmed include the $150 million 7.5% senior unsecured notes due 2024, $200 million 8.25% senior unsecured notes due 2013 and $85 million 8.75% senior unsecured notes due 2013, all at Ba1.

This completes the ratings review opened on Dec. 13 following the announcement by the company of its acquisition of Stelmar Shipping (not rated) for $1.36 billion.

Moody's said the ratings reflect the size and scale of Overseas Shipholding's tanker shipping operations, expectations of near-term free cash flow to reduce a substantial portion of the incremental debt associated with the Stelmar acquisition, Overseas Shipholding's maintenance of a favorable liquidity profile, and the limited integration risk of Stelmar's product tanker operations.

The ratings are balanced, Moody's said, by the risks associated with the highly cyclical shipping sector in which the company operates, the volatility of charter rates within that sector, and the company's use of short-term spot charters to employ the majority of its fleet.

© 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.