Standard & Poor's lowered its long-term corporate credit rating on Sweden
-based Stena AB
to double-'B' from double-'B'-plus. The senior unsecured rating on Stena was also lowered, to double-'B'-minus from double-'B'.
At the same time, the ratings were removed from CreditWatch, where they were placed with negative implications on Oct. 31, 2000. The outlook is negative. The downgrade reflects Stena's increased exposure to the difficult Northern European ferry market and a weaker financial profile following completion of the acquisition of Stena Line AB
. Stena Line, which is wholly owned by Stena, is one of the world's largest ferry companies, with routes in Northern and Western Europe. While it has a strong brand name, and operates a modern fleet of vessels, difficult market conditions have, however, placed significant financial and operational strain on the company, owing to fierce competition, the construction of new fixed links, and especially since the abolition of duty- and tax-free retail sales. As a result, Stena Line has reported very weak results over the past few years, despite comprehensive restructuring programs and cooperation with The Peninsular and Oriental Steam Navigational Co. (P&O).