Moody's rates Ship Finance notes B2, facility Ba3

Moody's Investors Service said it assigned a prospective B1 senior implied rating to Ship Finance International Ltd. and a prospective B2 rating to the proposed issue of $580 million of senior notes due 2013. Concurrently, Moody's assigned a prospective Ba3 rating to Ship Finance's proposed $1.05 billion senior secured credit facilities.

The outlook is stable.

The purpose of the funding is to partly finance the acquisition of 47 oil tankers from its parent company, Frontline Ltd.

Moody's said the ratings reflect the company's high debt leverage following the vessel acquisitions; the flexibility afforded to Ship Finance under the documentation to potentially increase leverage; the absence of Ship Finance's trading and financial history as an operating and legal entity (carved out from Frontline Ltd.); and the initial sole dependence on Frontline Ltd. to generate revenue from third-party chartering contracts.

The ratings also positively reflect Frontline's/Ship Finance's market leading position in the fragmented oil tanker market; Frontline management's long track record in the tanker industry; and the structured stability of Ship Finance's cash flows to service debt obligations and the downside protection afforded by the $250 million debt service reserve.

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