Malaysia’s RAM Ratings has reaffirmed both the AA3 ratings of Tanjung Offshore Berhad’s (Tanjung or the Group) RM150 million Serial Bonds with warrants (2006/2014) and RM200 million Islamic Medium-Term Notes Programme (2008/2023).
At the same time, the negative outlook on the long-term ratings has been maintained.
Tanjung is an investment-holding company with subsidiaries involved in marine support services and the provision of engineering equipment, maintenance as well as drilling-rig and platform services to the oil and gas sector.
The negative rating outlook is premised on the group’s weakened cashflow-protection measures, which have been dampened by its aggressive debt-funded capital expenditure and weak engineering-equipment division.
Looking ahead, the group also faces heightened contract-renewal risk and potentially lower daily charter rates (DCRs) for its time-charter contracts, particularly amid stiffer competition and the current softer market conditions.
Meanwhile, Tanjung’s AA3 ratings remain supported by steady contributions from its time-charter contracts, under which the troup is paid fixed DCRs regardless of the vessels’ utilisation.
That said, Tanjung is vulnerable to contract-renewal risk, particularly when a significant portion of its contracts expire at around the same time. -- Reuters
Read more: Tanjung Offshore’s debt rating reaffirmed http://www.btimes.com.my/Current_News/BTIMES/articles/20101217112748/Article/index_html#ixzz18L8Ffzwi
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