Moody's lifts Soechi Lines view to negative

Moody's Investors Service said it changed the outlook to negative from stable on Soechi Lines Tbk. and Soechi Capital Pte. Ltd.

Moody's also said it affirmed the B1 corporate family rating and B1 senior unsecured rating on the $200 million notes due 2023 issued by Soechi Capital, which is a wholly owned subsidiary of Soechi.

The notes are unconditionally and irrevocably guaranteed by Soechi and all its material subsidiaries, which own all of Soechi's vessels and its shipyard, Moody's explained.

The negative outlook reflects Soechi's weak credit metrics, resulting from a more aggressive debt-funded growth strategy than previously anticipated, the agency said.

Soechi increased its balance-sheet debt by $49 million to $296 million in the first six months of 2018, driving its adjusted debt-to-EBITDA to 5.5x on a trailing 12-month basis, Moody's said.

The debt was primarily used to finance the acquisition of its first very large gas carrier and the conversion of one of its Aframax's into a floating storage and offloading vessel, the agency said.

Moody's said it expects the earnings from these two transactions to meaningfully add to EBITDA in the second half of 2018 and in 2019, which should allow Soechi to reduce its debt-to-EBITDA to between 4.5x and 5.0x in 2019.

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