S&P puts OSG unsecured notes on positive watch

Standard & Poor’s said it affirmed the B- rating on Overseas Shipholding Group’s (OSG) $107 million 7˝% senior unsecured notes due 2021 and 2024.

The agency also said it placed the B- ratings on the company’s $238 million 8 1/8% senior unsecured notes due 2018 on CreditWatch with positive implications following news of the company’s tender offer.

S&P also affirmed the BB- ratings on the company’s credit- and term-loan facilities for each of its principal subsidiaries. This includes OSG Bulk Ships Inc.’s $75 million asset-based lending facility and $594 million senior secured term loan due 2019, along with OSG International’s $50 million revolving credit facility and $620 million senior secured term loan due 2019. The 1 recovery ratings on the facilities are unchanged.

If the company’s tender offer is completed as projected, S&P said it will raise the rating on the 8 1/8% senior unsecured notes to BB- based on a decline in the company’s total amount of outstanding senior unsecured debt.

The company commenced a cash tender offer for up to $119 million in aggregate principal amount of the 8 1/8% notes and any and all of the outstanding 7˝% notes.

Based on a recovery analysis on the company’s capital structure pro forma for the transaction, the agency said it will likely raise the recovery rating on the company’s 8 1/8% senior unsecured notes to 1 from 5, indicating 90% to 100% expected default recovery.

The company’s corporate credit rating and outlook are unchanged.

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