Standard & PoorÆs revises Teekay ShippingÆs outlook to stable
Standard & Poor's Ratings Services, a provider of independent credit ratings, risk evaluation and investment research, has revised its outlook on Teekay Shipping Corp. to stable from negative.
'All ratings are affirmed, including the BB+ corporate credit rating,' Standard & Poor's Ratings Services said in a statement.
Eric Ballantine, a credit analyst for Standard & Poor's, said, 'the outlook revision reflects the company's solid financial performance, resulting from relatively strong tanker rates and modest debt reduction. Additionally, the company's financial profile continues to benefit from its growing fixed-rate charter business, which should help smooth earnings and cash flow during the next cyclical downturn.'
However, 'somewhat offsetting Teekay's recent improvements are its shareholder-friendly actions (increasing dividends and share buybacks),' Ballantine added.
Standard & Poor's ratings on Teekay Shipping, which is based in Nassau, in the Bahamas, reflect its participation in the competitive, volatile, highly fragmented and fixed-capital-intensive bulk shipping, industry combined with an aggressive growth strategy.
'Positive credit factors include the company's solid business position as the leading midsize Aframax crude-oil tanker operator, strong market share in the shuttle tanker markets, and a growing liquefied natural gas (LNG) business. Contracts in Teekay's shuttle tanker and LNG businesses tend to be longer term in nature, and as a result, provide the company with fairly predictable cash flows. Additionally, the company provides ship management services to third parties,' Standard & Poor's Ratings Services explained.
Standard & Poor's appraisal warned, however, that 'if Teekay fails to temper its growth strategy and relatively large cash outflows associated with share buybacks and dividends, without improving its credit profile, an outlook change to negative or a ratings downgrade is possible.'
An outlook change from stable to positive 'over the near term is less likely,' Standard & Poor's Ratings Services concluded.