S&P lowers Pacific International

Standard & Poor's said it lowered the long-term corporate credit rating on Pacific International Lines (Pte.) Ltd. to BB- from BB and removed it from CreditWatch with negative implications.

The outlook is negative.

S&P said the downgrade was driven by expectations that pressure on the company's profitability from depressed freight rates and aggressive debt-funded expansion will weaken its cash flow measures further.

The rating also reflects the company's industry risks, the agency noted.

These are partially offset by revenue diversity, flexibility in fleet management and adequate liquidity, the agency said.

"In our view, container shipping is likely the worst-hit segment in the shipping industry in the current global economic downturn, given the material decrease in international trade volume," S&P analyst Anita Yadav said in a statement.

Given higher debt and significant decline in EBITDA, the agency said it expects the company's cash flow measures to deteriorate significantly, with its debt-to-EBITDA ratio to cross double digits in the current financial year, compared with 4.1x in December 2008.

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