Moody's Rates Sovcomflot Ba2: Negative Financial Outlook

By George Backwell
Friday, July 04, 2014
Tankship bridgefront: Photo courtesy of SCF

Moody's Investors Service says it has confirmed the Ba2 corporate family rating (CFR) and the Ba2-PD probability of default rating (PDR) of Sovcomflot JSC with $800 million of rated debt affected.

Concurrently, Moody's has confirmed Sovcomflot's Ba3 senior unsecured issuer rating and the Ba3 senior unsecured rating assigned to the $800 million Eurobond issued by SCF Capital Limited, which is a 100% indirect subsidiary of Sovcomflot (Sovcomflot guarantees the Eurobond). The outlook on all ratings is negative.

Ratings Rationale
This confirmation of Sovcomflot's ratings reflects Moody's expectation that the company will be able to improve its financial metrics over the next 12-18 months, as a result of (1) the completion of a number of new vessels that start generating EBITDA and (2) a temporary improvement in trading conditions in the international crude oil shipping market in the first quarter of 2014.

As Sovcomflot is a 100% state-owned company, Moody's applies its Government-Related Issuer (GRI) rating methodology in determining the company's CFR. According to this methodology, the rating is driven by a combination of (1) Sovcomflot's baseline credit assessment (BCA), which is a measure of standalone credit strength, of b2; (2) the Baa1 local currency rating of the Russian government; (3) the low default dependence between Sovcomflot and the government; and (4) the strong probability of provision of state support to the company in the event of financial distress.

The negative outlook on the ratings reflects Moody's concern that the recovery of Sovcomflot's financial metrics to the levels commensurate with its b2 BCA and Ba2 CFR, may take longer than expected because of continuing challenging market environment. A downgrade could be considered if the company does not reduce its leverage to 6.5x adjusted debt/EBITDA while maintaining adjusted funds from operations (FFO) interest coverage at 3.0x over the next 12 to 18 months.

Source: Extracted from Moody's Global Credit Research 4, July 2014

 

Maritime Reporter June 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Impact of Financial Crisis on Greek Shipping

Though international analysts like Morgan Stanley said that the Greek crisis will not have a direct impact on shipping companies, Greek shipping companies listed on U.

APL’s Schedule Reliability Scales Up

APL was the most reliable carrier with a global on-time performance of 85.5% in May 2015, according to the latest Global Liner Performance Report by SeaIntel Maritime Analysis.

Gazprom, Gasunie Sign Framework Agreement - LNG

At a Meeting between Alexey Miller, Chairman of the Gazprom Management Committee and Han Fennema, CEO and Chairman of the Executive Board of Gasunie a Framework

Tanker Trends

Japan's MHI Bags Indian Oil's LNG Storage Tank Contract

Indian Oil Corp (IOC) has awarded a contract to build two football stadium-sized liquefied natural gas (LNG) storage tanks at its upcoming Ennore LNG import terminal

FSL Trust Inks Tanker Contracts

FSL Trust Management Pte. Ltd., as trustee-manager of First Ship Lease Trust announced new time charter agreements for FSL Shanghai, FSL Hamburg and FSL Singapore.

Proforma DAs on the Go

DA-Desk has launched a new service under its PortSpend ManagementTM solution, the Proforma Disbursement Account (PDA) Approval Mobile App. The mobile app is available

Finance

As First Victims Mourned, Italian Navy Searches On

Italy held a funeral service on Tuesday for 13 migrants who died in the worst shipwreck in the Mediterranean in recent history, while the navy continued its search for other victims of the disaster.

Migrant Sailboat Sinks in Aegean, 17 Missing

A sailboat carrying migrants sank in in the Aegean sea between Turkey and Greece on Tuesday and at least 17 people were missing, Greek authorities said. Greece's

Japan's MHI Bags Indian Oil's LNG Storage Tank Contract

Indian Oil Corp (IOC) has awarded a contract to build two football stadium-sized liquefied natural gas (LNG) storage tanks at its upcoming Ennore LNG import terminal

 
 
Maritime Careers / Shipboard Positions Maritime Security Maritime Standards Naval Architecture Navigation Port Authority Salvage Ship Repair Ship Simulators Sonar
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.2085 sec (5 req/sec)