The long-term corporate credit and senior debt rating of Kawasaki Kisen Kaisha (“K” Line) has been cut down to BB from BB+ by ratings agency Standard & Poor’s (S&P) amid expectations of big losses for the box line at the end of its 2011 fiscal year.
Japan’s third largest carrier anticipates a net loss of JPY32 billion (US$410 million) in fiscal 2011 in the wake of falling freight rates, a weak dry bulk market, declining Japanese car exports and steep oil prices.
“K” Line, however, has gotten a more positive view of its longer-term business outlook, which S&P described as “stable.” The ratings agency said the shipping line’s financial performance will gradually recover in the coming years as it benefits from a market recovery that includes an improvement in the car-carrier market in which it has a major stake.
But analysts are less optimistic about “K” Line’s prospects in the face of the recent formation of the mega group G6 Alliance. The new alliance aims to dominate the Asia- Europe trades, where the CKYH Alliance of “K” Line, Cosco, Yang Ming and Hanjin Shipping has been faring poorly.
