First time rating assignment
Milan, January 14, 2011 -- Moody's Investors Service has today assigned a B2 corporate family rating
(CFR) and a B2 probability-of-default rating (PDR) to Excel
Maritime Carriers Ltd (Excel or the company). Moody's has
also assigned a provisional (P)Caa1 (LDG 5/88.2%) senior
unsecured rating to Excel's new proposed issuance of USD250 million
senior unsecured notes due in 2019. The rating outlook is stable.
Moody's issues provisional ratings in advance of the final sale
of securities, and these ratings only represent Moody's preliminary
opinion on the transaction. Upon a conclusive review of the transaction
and associated documentation, Moody's will endeavour to assign
a definitive rating to the securities. A definitive rating may
differ from a provisional rating.
"The combined effect of the acquisition of Quintana, completed
in 2008, and the subsequent market deterioration, negatively
affected both Excel's capital structure and credit metrics,"
says Marco Vetulli, a Moody's Vice President and lead analyst
"The CFR assigned to Excel reflects Moody's expectation that
the company's credit metrics will remain subdued for most of the
next two years. This is because oversupply in the dry bulk market
is slowing the pace of improvement of the freight rates after the 2008-09
crisis, despite the full recovery of seaborne trade in 2010 and
its positive trend, led by the growth of developing economies,"
adds Mr. Vetulli.
In addition, Moody's highlights that Excel is an active company
in the spot market, which has increased the company's risk
However, the B2 CFR also reflects that these negatives are partially
offset by three different factors: (i) Excel's consolidated
leading position in the dry bulk industry as a result of growth by acquisition;
(ii) Excel's operating efficiency, characterised by a relatively
prudent cost structure and positive free cash flow generation; and
(iii) its strong asset base, with a fleet market value of approximately
USD1.7 billion as of the end of September 2010, according
to independent third-party appraisals.
The stable outlook anticipates that Excel will maintain its position as
a leading dry bulk owner and operator and that credit metrics will not
deteriorate in 2011 compared with 2010 levels, but show a moderate
improvement over the next couple of years
Positive pressure on the rating or outlook could develop if Excel is able
to demonstrate the ability to de-lever such that adjusted Debt
to EBITDA reduces below 5.5 times on a sustainable basis,
Funds from operations + Interest to Interest approaches 4 times and
Retained Cash Flow to Net Debt approaches the mid teens.
Negative pressure on the rating or the outlook could develop if Retained
Cash Flow to Net Debt is sustained below the low teens, if Funds
from Operations + Interest to Interest is sustained below 3.0
times and if Debt to EBITDA approaches 7 times.
Furthermore, immediate downward pressure on the ratings could result
from concerns regarding liquidity.
The USD250 million proposed bond will be issued by Excel, the holding
company of the group. The bond will be a senior unsecured instrument
with a bullet maturity date of 8 years. As none of Excel's
subsidiaries will guarantee the notes, claims of such subsidiaries'
creditors, including trade creditors, will have priority ranking
with respect to the assets and earnings of such subsidiaries over the
claims of the holders of the notes. The terms will include standard
bond incurrence covenants. The senior unsecured rating is two notches
below the CFR to reflect the level of relative subordination in the capital
structure to the current amount of priority secured debt outstanding.
The proceeds of the issuance will be used to repay approximately USD240
million of indebtedness outstanding under Excel's secured revolving
facility and for general corporate purposes.
Ratings assigned today:
- Corporate Family Rating of B2
- Family Loss Given Default Rating of 50%
- Probability of Default Rating of B2
- Provisional senior unsecured rating on the proposed USD250 million
notes issuance of (P) Caa1, LGD-5, 88.20%
The principal methodologies used in this rating were Global Shipping Industry
published in December 2009, and Loss Given Default Rating Methodology
published in June 2009.
Excel Maritime Carriers LTD (EXCEL), listed in the NYSE, operates
a fleet of 49 vessels (comprising of 42 wholly-owned vessels and
seven bareboat charters), with an aggregate carrying capacity of
4.2 million dead weight tonnes and an average age of 10 years.
At the end of September 2010, the company's total LTM revenues
were USD 419 million.
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, public information, and confidential
and proprietary Moody's Investors Service information.
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of assigning
a credit rating.
The rating has been disclosed to the rated entity or its designated agents
and issued with no amendment resulting from that disclosure.
Moody's Investors Service may have provided Ancillary or Other Permissible
Service(s) to the rated entity or its related third parties within the
three years preceding the Credit Rating Action. Please see the
ratings disclosure page www.moodys.com/disclosures on our
website for further information.
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in assigning a credit rating is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
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Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
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Investors Service provides a date that it believes is the most reliable
and accurate based on the information that is available to it.
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used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
VP - Senior Credit Officer
Corporate Finance Group
Moody's Italia S.r.l
Paloma San Valentin
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Service Ltd.
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Moody's assigns B2 corporate family rating to Excel; outlook stable
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