Moody's rates BW Group bonds Baa3

Moody's Investor Service said it assigned a Baa3 issuer rating to BW Group Ltd. and a Baa3 rating to its proposed 10-year senior unsecured bonds.

The outlook is stable.

The bond proceeds are expected to be used for refinancing and general corporate purposes.

"The rating balances BW's strong operating profile and prudent management strategy against its financial metrics which are slightly weak for its rating," Elizabeth Allen, a Moody's vice president and lead analyst for the company, said in a written statement.

"BW has a well diversified business by segment, geography and customer base, and has a track record of maintaining revenue stability, since about half of its vessels are under longer-term fixed-rate contracts," she said. "These characteristics will to some extent shield it from industry volatility."

The shipping industry is characterized by high volatility driven by supply of vessels and demand for shipped products, Moody's said. These factors are in turn affected by a host of economic, political and regulatory developments.

BW also has financial flexibility including minimal near-term debt repayment, undrawn committed credit facilities of about $1 billion and a significant portion of unencumbered assets. Secured debt accounted for only 9% of total tangible consolidated assets as of December 2006, the agency said.

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