S&P: Credit Quality of SE Asian Owners Drops

Thursday, January 20, 2000
S&P: Credit Quality of SE Asian Owners Drops Standard & Poor's said the credit quality of shipping companies across Southeast Asia has suffered in the last two years, with most companies in the "weak to vulnerable" range, compared with "fair to weak" previously. "Earnings vulnerability and aggressive capital structures, characterized by modest and volatile cash flows and high debt levels, have strained the ability of many companies to meet financial obligations in a timely manner," shipping analyst Ee-Lin Tan said. Tan said underpinning the deterioration were limited geographic diversity and exposure to regional trade flows, intense price-based competition led by lower cargo traffic in certain trade routes and excess capacity within several shipping segments. She said the developments had caused freight rates to drop significantly and had heightened the risk of single-segment operations for many Southeast Asian shipping companies. Weakened earnings, rising operating costs, large foreign exchange losses as a result of the depreciation of regional currencies against the U.S. dollar, and a heavy reliance on debt to finance aggressive capital expenditure programs in the past have caused credit measures to worsen significantly, she said. SE Asian Shipping Companies Reviews by S&P Shipping company Overall credit profile Neptune Orient Lines Ltd. Weak Malaysia International Shipping Corp Fair Regional Container Lines Public Co. Weak Osprey Maritime Ltd. Weak Samudera Shipping Line Ltd. Fair William, Gothong & Aboitiz Inc. Weak Precious Shipping Public Co. Ltd. Vulnerable PT Berlian Laju Tanker Tbk. Vulnerable Thoresen Thai Agencies Public Co. Ltd. Vulnerable Negros Navigation Co. Inc. Weak
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