Indonesian tanker company Soechi Lines Tbk has been assigned a definitive B1 corporate family rating (CFR) with a stable rating outlook, according to Moody’s rating agency.
Moody’s has also withdrawn the provisional (P)B1 rating on the proposed USD 200 million senior unsecured notes of Soechi Capital B.V., a wholly owned subsidiary of Soechi, because the notes were not issued.
“The B1 rating reflects Soechi’s solid market position in Indonesia’s domestic oil & gas shipping sector, the visibility of revenues driven by its use of long-term charter contracts and its longstanding relationship with Pertamina,” Brian Grieser, a Moody’s Vice President and Senior Credit Officer and lead analyst for the company, said.
The company has demonstrated a prudent approach to growth marrying second hand vessel purchases with long-term charter contracts to ensure a solid return on investment. As a result, the company generates high margins, with EBITDA margins of 47% for the twelve months ended 31 March 2016.
Soechi’s rating reflects its high customer and vessel concentration, with Pertamina, the national oil company of Indonesia, accounting for over 50% of revenues in 2015 and its two Very large Crude Carriers (VLCCs) accounting for an estimated 25% of shipping revenues, Moody’s said.
The rating also reflects Soechi’s weak liquidity profile driven by its dependence on short term loans and its high capital spending levels. This is partly mitigated by a track record of refinancing its bank loans with relationship banks.
The stable outlook is supported by the expectation that the company will maintain its longstanding relationship with Pertamina and will have good revenue visibility from its time charter contracts.
Soechi operates a fleet of 35 vessels comprising 19 oil tankers, 10 chemical tankers, 3 gas tankers and 3 Floating Storage & Offloading Units (FSO) having a total capacity of 1.46 million dwt.