KUALA LUMPUR (March 5): Malaysian Rating Corporation (MARC) has revised the outlook on ALAM MARITIM RESOURCES BHD []’s Islamic notes from stable to negative following the company’s weaker credit profile.
The ratings agency said on Monday it had affirmed its ratings at AA-IS and MARC-1ID/AA-ID on Alam Maritim’s RM500 million Sukuk Ijarah medium term notes and RM100 million Murabahah commercial papers/Murabahah medium term notes programmes respectively. The rating action affects RM475 million of outstanding notes issued under the rated programmes.
“The revised outlook reflects the pressure on Alam Maritim's credit profile arising from significantly weaker earnings and cash flow generation in 2010 and 2011,” it said.
MARC pointed out Alam Maritim’s earnings had been pressured by lower vessel utilisation and charter rates, reflecting strong competition and a difficult operating environment.
While MARC acknowledges the improvement in Alam Maritim’s operating environment since the second quarter of 2011 it believed the group’s financial measures would remain weak for the current ratings in the next 12 to 18 months.
The ratings agency added the negative outlook also reflects the limited headroom within Alam Maritim’s consolidated financial metrics and current ratings to absorb any further adverse operating developments.
“Without a sustained recovery in market conditions, Alam Maritim’s will likely face substantial challenges in maintaining adequate credit metrics for its current ratings. The affirmed ratings continue to acknowledge Alam Maritim's established and leading position in the domestic offshore support vessel (OSV) market, and its liquidity position which remains adequate vis-à-vis its debt maturity profile,” it said.
Alam Maritim is the third largest domestic OSV operator by tonnage; it owns 41 Malaysian-flagged vessels comprising mostly anchor handling tug supply (AHTS), utility and supply vessels.
The company expects to take delivery of another two AHTS vessels with the latest dynamic positioning system this year, which should benefit its domestic competitiveness.
While the OSV charter business remains its core earnings generator, its other key businesses include underwater services and offshore related installation and CONSTRUCTION [] activities.
“The rating outlook could revert to stable if Alam Maritim’s operating performance improves over the coming quarters and the group continues to demonstrate sufficient cash flow generating capability and liquidity to meet its notes obligations, failing which the ratings would come under downward rating pressure,” it said.
The ratings agency said on Monday it had affirmed its ratings at AA-IS and MARC-1ID/AA-ID on Alam Maritim’s RM500 million Sukuk Ijarah medium term notes and RM100 million Murabahah commercial papers/Murabahah medium term notes programmes respectively. The rating action affects RM475 million of outstanding notes issued under the rated programmes.
“The revised outlook reflects the pressure on Alam Maritim's credit profile arising from significantly weaker earnings and cash flow generation in 2010 and 2011,” it said.
MARC pointed out Alam Maritim’s earnings had been pressured by lower vessel utilisation and charter rates, reflecting strong competition and a difficult operating environment.
While MARC acknowledges the improvement in Alam Maritim’s operating environment since the second quarter of 2011 it believed the group’s financial measures would remain weak for the current ratings in the next 12 to 18 months.
The ratings agency added the negative outlook also reflects the limited headroom within Alam Maritim’s consolidated financial metrics and current ratings to absorb any further adverse operating developments.
“Without a sustained recovery in market conditions, Alam Maritim’s will likely face substantial challenges in maintaining adequate credit metrics for its current ratings. The affirmed ratings continue to acknowledge Alam Maritim's established and leading position in the domestic offshore support vessel (OSV) market, and its liquidity position which remains adequate vis-à-vis its debt maturity profile,” it said.
Alam Maritim is the third largest domestic OSV operator by tonnage; it owns 41 Malaysian-flagged vessels comprising mostly anchor handling tug supply (AHTS), utility and supply vessels.
The company expects to take delivery of another two AHTS vessels with the latest dynamic positioning system this year, which should benefit its domestic competitiveness.
While the OSV charter business remains its core earnings generator, its other key businesses include underwater services and offshore related installation and CONSTRUCTION [] activities.
“The rating outlook could revert to stable if Alam Maritim’s operating performance improves over the coming quarters and the group continues to demonstrate sufficient cash flow generating capability and liquidity to meet its notes obligations, failing which the ratings would come under downward rating pressure,” it said.
