HMM and Polaris Shipping diverge in credit ratings

Polaris Shipping has maintained its strong credit rating performance, while Hyundai Merchant Marine (HMM) fell a grade in its credit rating.

The Korea Ratings Corporation upgraded Polaris' non-guaranteed bond rating from BBB to BBB+ and its corporate bill rating from A3 to A3+.
On the other hand, HMM's non-guaranteed bond decreased from BB+ to BB and its corporate bill rating from B+ to B.

Other shipping companies have remained at the same level as Hanjin Shipping, Dong-A Tanker, and Heung-A Shipping at BBB-, SK Shipping at A-, Sinokor, Hyundai LNG Shipping, H-Line Shipping at BBB+, and Korea Line Corporation at BBB.

The Korea Ratings Corporation has forecast that it will be hard for companies to overcome the uncertainty in the shipping market in spite of performance improvements due to the slide in oil prices.

Hanjin Shipping's operating profit of 155 billion won for the first quarter is regarded as an effect of rates increases in North American services due to the strike of the stevedore union. The trade volume for the Pacific Service accounts for 41% of all cargo loadings for Hanjin Shipping. Unfortunately, HMM has not been able to fully enjoy the effect of freight charge rises in a relative sense due to the delay in the rearranging of routes.

Polaris Shipping, the world's largest VLOC (Very Large Crude Carrier) operator has been showing stable growth and profitability after a contract affreightment with the Brazillian mining company, Vale, at the end of 2012. It brought an over 45% sales growth in 2013. Most of Polaris's fleet (26 owned, 6 chartered, 32 in total) are signed for long-term contracts of carriage with glit-edged shippers, such as Vale, Posco, and Korea South-East Power for 9 to 20 years.

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