Owner and operator of liquefied natural gas carriers Dynagas LNG Partners LP has been assigned a corporate family rating of B3 and a probability of default rating of B3-PD, Moody’s rating agency informed.
The B3 corporate family rating primarily reflects Dynagas Partners’ long-term charter agreements with counterparties with good credit standing, competitive advantage in owning and operating ice class vessels and adequate liquidity.
The agency said that Dynagas Partners, an LNG shipping company operating a fleet of six vessels, has a stable rating outlook.
Additionally, the company has been assigned a (P)B1 instrument rating to Dynagas Partners’ proposed senior secured USD 480 million Term Loan B currently being marketed, to be borrowed by Arctic LNG Carriers Ltd.
“Dynagas Partners’ B3 rating reflects the unique niche with limited competition the company occupies in operating ice class vessels, as well as significant visibility of revenues from its long-term charters with Gazprom, PJSC (Gazprom, Ba1 stable), Statoil ASA (Aa3 stable) and Yamal LNG (a joint venture of PAO Novatek (Ba1 stable), Total S.A. (Aa3 stable), China National Petroleum Corporation (Aa3 negative) and Silk Road Fund (Chinese state owned investment fund, unrated),” Maria Maslovsky, a Vice President-Senior Analyst at Moody’s and the lead analyst for Dynagas LNG Partners LP, said.
“These strengths are counterbalanced by Dynagas Partners’ small fleet of six vessels resulting in customer and asset concentration, as well as material leverage and high dividend payout,” Maslovsky added.
The instrument rating of (P)B1 assigned to the proposed Term Loan B is two notches above Dynagas Partner’s corporate family rating of B3 and reflects a security package including first priority liens on all six vessels owned by the company and substantial cushion from existing senior unsecured bond. The Term Loan B will also benefit from covenants that limit the group’s debt, through specific debt service coverage and loan-to-value covenants.
“The stable rating outlook reflects our expectation that Dynagas Partners will maintain its strong contract coverage and adequate liquidity. We also anticipate sustained demand for the ice class LNG vessels,” Moody’s informed.