Moody`s downgrades MOL and NYK outlook because of sector`s weakness

Time:2011-09-20 Browse:50 Author:RISINGSUN

MOODY`s, one of the big three ratings agencies, has downgraded the outlook of Japanese carriers MOL and NYK because of weakened profitability and growing uncertainty in shipping industry, but their actual ratings, Baa1 for NYK and A3 for MOL, remain unchanged.

Moody`s does not rate the other Japanese major "K" Line.


The agency referred to NYK and MOL`s own forecasts that its operating margins will fall. Moody`s said it believed both carriers do not have immediate financial difficulties because they have firm relationship with banks.


Moody`s also expects the two Japanese carriers to "maintain stable profits overall" because they possess "long-term contract business and stable non-shipping operations", adding that "their large fleets give options for scrapping, slow steaming and cancelling charters."


But it said these positive factors "are not enough to offset current negative factors, hence the change in outlook to negative", reported Lloyd`s List. If the two carriers show cash flow improvement, their outlooks can be upgraded to stable, said Moody`s, adding that ratings will be downgraded if profitability and leverage decline.