Trends in global shipping industry have an impact on FESCO rating calculations
Moody’s Investors Service reviewed Corporate Family Rating (CFR) and Probability of Default Rating (PDR) of FESCO by international scale. At the same time, Moody’s Interfax Investors Service reviewed the national-scale rating of FESCO, the company reports according to RZD-Partner.
Following this review, the new current CFR rating is B3 (one notch downgrade from B2), PDR rating is Caa1 (one notch downgrade from B3), and the national scale rating is Baa3.ru (one notch downgrade from A3.ru). The outlook of the ratings is “negative”.
The review of the rating reflects the approach of Moody’s to the prospects of the global shipping industry. According to Moody’s press release, “…The principal methodology used in rating FESCO was the Global Shipping Industry rating methodology, which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the Ratings Methodologies sub-directory.”
Another factor of the rating action, reported by Moody’s, is the agency’s concern about the execution risk of FESCO’s 2009 refinancing plan.
According to Yury Gilts, FESCO Chief Financial Officer, “the review of the rating was scheduled by the Agency in January this year. Based on Moody’s rating methodology applied to FESCO, the trends in the global shipping industry apparently have a very significant impact on FESCO rating calculations, although the share of shipping in the Group’s consolidated revenues is only slightly over 16% based on 1H 2008 numbers, with more sizeable contribution by rail, logistics and port businesses. We are confident that the diversification of our business is a significant advantage in current circumstances, enhancing FESCO’s ability to generate cash going forward.
At the same time, current liquidity position and the pace at which we progress in implementing our refinancing program with both commercial banks and international financial organizations such as EBRD, makes us confident of successful execution of this program.”
According to FESCO’s preliminary unaudited Management Accounts, total short-term maturities outstanding for 2009 equal to USD 260 mln, with cash and equivalents as of January 1, 2009 of USD 197.8 mln,
Following this review, the new current CFR rating is B3 (one notch downgrade from B2), PDR rating is Caa1 (one notch downgrade from B3), and the national scale rating is Baa3.ru (one notch downgrade from A3.ru). The outlook of the ratings is “negative”.
The review of the rating reflects the approach of Moody’s to the prospects of the global shipping industry. According to Moody’s press release, “…The principal methodology used in rating FESCO was the Global Shipping Industry rating methodology, which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the Ratings Methodologies sub-directory.”
Another factor of the rating action, reported by Moody’s, is the agency’s concern about the execution risk of FESCO’s 2009 refinancing plan.
According to Yury Gilts, FESCO Chief Financial Officer, “the review of the rating was scheduled by the Agency in January this year. Based on Moody’s rating methodology applied to FESCO, the trends in the global shipping industry apparently have a very significant impact on FESCO rating calculations, although the share of shipping in the Group’s consolidated revenues is only slightly over 16% based on 1H 2008 numbers, with more sizeable contribution by rail, logistics and port businesses. We are confident that the diversification of our business is a significant advantage in current circumstances, enhancing FESCO’s ability to generate cash going forward.
At the same time, current liquidity position and the pace at which we progress in implementing our refinancing program with both commercial banks and international financial organizations such as EBRD, makes us confident of successful execution of this program.”
According to FESCO’s preliminary unaudited Management Accounts, total short-term maturities outstanding for 2009 equal to USD 260 mln, with cash and equivalents as of January 1, 2009 of USD 197.8 mln,