|
|
KUALA LUMPUR: Moody's
Investors Service has a negative outlook for all
three shipping sectors of dry bulk, tankers, and
liners in Asia Pacific over the next 12-18
months.
Moody's said in a report on Monday that the
global economic downturn, tightening bank
credit, increased volatility in currencies and
financial markets have aggravated the already
surplus shipping capacity.
This was amid a sharp drop-off in demand for
shipments of containerised goods, oil, and bulk
commodities, it said.
“Such adverse developments may last for an
extended period and are the primary drivers for
the negative outlook,” it added.
“Although the credit crisis may result in the
cancellation of some new building orders, a
correction in the excess supply from a sizeable
order book will take a long time,” said Peter
Choy, the report's lead author and a senior
credit officer at Moody's.
Choy notes that the dry-bulk sector has suffered
the most.
He adds, "A freezing of trade credit has
exacerbated a slowdown in demand for commodities
and contributed to the recent, unprecedented
plunge in the sector's Baltic Dry Index."
"Unstable operating costs resulting from
volatile bunker expenses and lower freight rates
have undermined profitability, earnings, and
other financial fundamentals in all three
sectors," said Elizabeth Allen, a Moody's senior
credit officer and the report's second author.
She said such instability could put further
pressure on ratings, which for Moody's rated
issuers remain stable despite the negative
outlooks for the overall sectors.
When asked about the disparity between rated
firms and the rest, Allen explains, "Long-term
agreements on many vessels, adequate liquidity
through good access to banks, diversified trade
and types of vessels all support rated shipping
companies such as MISC, BW Shipping, NYK, and
MOL." |
