Moody’s downgrades K-Line

Moody's Investors Service said it downgraded Kawasaki Kisen Kaisha, Ltd.'s (K-Line) corporate family rating to Ba3 from Ba2.

The outlook is stable.

The downgrade concludes a review for possible downgrade that began in February, Moody’s said.

The downgrade reflects an expectation that the environment in which K-Line operates will remain challenging, making it difficult for the company to quickly de-leverage, the agency explained.

Since the company's rating was placed under review, the company further lowered its earnings for the fiscal year ending March 31, 2016, citing very low freight rates in container ships and dry bulk, the agency said.

In addition, K-Line lowered its medium-term targets, reducing its ordinary profit target for the fiscal year ending March 31, 2020 by 47%, Moody’s said.

The lower earnings level will reduce the speed at which the company can de-leverage, the agency added.

But Moody's said it expects the company's restructuring, which includes reducing operating expenses and exiting unprofitable routes, should help turn around its earnings.

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