Standard & Poor's Ratings Services said today that rating on BW Group Ltd. (BB/Stable/--) and the 'BB' issue rating on the company's US$500 million of senior unsecured notes due 2017 are not affected by the company's refinancing plan, Reuters reports. We believe BW's financial risk profile and liquidity would still support the current rating, if the company executes the refinancing under the terms made public. In our view, the refinancing arrangement will better position bondholders in the event of distress and prevent subordination of the bonds.
This is because the bonds will have a separate list of vessels as collateral from BW's proposed US$1.5 billion secured revolving credit facility. The bonds will in effect rank pari passu with the proposed revolving credit facility.
Standard & Poor's does not differentiate the ratings on the bonds from the rating on BW. In the case of international fleets, with many different port jurisdictions, it is uncertain how efficiently the law on recovery from ships will be enforced.
This is because the bonds will have a separate list of vessels as collateral from BW's proposed US$1.5 billion secured revolving credit facility. The bonds will in effect rank pari passu with the proposed revolving credit facility.
Standard & Poor's does not differentiate the ratings on the bonds from the rating on BW. In the case of international fleets, with many different port jurisdictions, it is uncertain how efficiently the law on recovery from ships will be enforced.