| 2007/06/12 |
| Analyst: |
Anshukant Taneja,
Singapore, (65)-6239-6340 |
RatingsDirect
publication date: 12-Jun-2007
Disseminated from Standard & Poor's RatingsDirect:
http://www.ratingsdirect.com/
SINGAPORE (Standard & Poor's)—Standard & Poor's Ratings Services said today it assigned its 'BBB-' corporate credit rating to Bermuda-incorporated, Singapore-based shipping company BW Group Ltd. (BW). The outlook is stable. At the same time, Standard & Poor's assigned its 'BBB-' issue rating on the proposed 10-year senior unsecured bond. The bond proceeds will be used primarily to refinance an outstanding revolving loan and general corporate purposes. The ratings are subject to final documentation.
"The ratings on BW reflect the company's competitive, efficient, and diversified shipping operations, its reputation and solid track record as a renowned quality vessel owner and operator, high proportion of charter contracts on a fixed rate basis, and moderate balance sheet leverage," said Standard & Poor's credit analyst Joey Chew. "The ratings also reflect the management's stated commitment to the capital expenditure plan to keep the financial matrix consistent with the ratings level." The ratings are constrained by the below-average industry characteristics of the shipping sector, the company's active investment program, and expectations of weakening cash flow coverage ratios in the near to medium term.
BW's liquidity position
and financial flexibility are very strong compared with other industry
participants'. The group relies on a mix of cash and investments on balance
sheet and committed back-up credit lines. Furthermore, as the group's
debt is largely unsecured, BW benefits from additional funding flexibility.
BW's debt maturity profile is also very long compared with its rated
shipping peers', which supports the ratings by reducing refinancing risk.
The group has virtually no near-term debt maturities.
"Although a
large part of the group's debt is raised at its subsidiaries' level, creating
structural subordination issues, Standard & Poor's considers the holding
company and issuer to have high liquidity and substantial operating cash
flow and assets, sufficient to mitigate structural subordination risks.
BW's policy to maintain its low asset encumbrance is another important
mitigating factor of the structural subordination risk," Ms. Chew
noted.
Complete ratings information is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com.
All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search.
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| 1. S&P: BW Group Stays On Watch Negative Pending Financial Results And Company Information (2008/5/2) |
| 2. S&P: BW Group Ltd. And Debt Assigned 'BBB-' Ratings; Outlook Stable (2007/6/12) |