Polaris Shipping's credit rating drops

Korea Ratings (KR. CEO Yoon In-Seop), a Korean financial infrastructure group, downgraded the Polaris Shipping(CEO Kim Wan-Jung) credit ratings to BBB- from BBB.

KR pointed the finger of blame for these results on lack of investments in the shipper’s fleet despite the carrier having maintained high profitability levels and a healthy cash flow.

Polaris Shipping has been on a roll though during a prolonged market depression and negative industry watch owing to long-term transportation contracts with Posco, Vale and others since 2007.

However the company has some complicated fund transactions with its subsidiary companies, which contributed to the downgraded rating. Polaris Shipping has 7~8 subsidiaries, include Harmony Cruise.

Mr. Jung Sang-Hoon, an analyst at KR, said, "If the Seoul-based carrier implements an aggressive strategy to expand its fleet with reasonable new-building prices or to make more contracts with major consignors, extra capital expenditures that exceed cash flow for operation could occur. So the company should monitor its cash flow variability before the company sees sufficient growth." < 김보람 기자 brkim@ksg.co.kr >