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Moody's: One single big customer hurts Danish Ship Finance's rating

A significant concentration with few major lenders hurts the credit rating of Danish Ship Finance, according to rating bureau Moody's.

Photo: Maersk Line

A high concentration with only a few lenders in relation to total loans is one significant reason that rating bureau Moody's credit rating for Danish Ship Finance is extremely low. In 2013 one single customer accounted for 35-40 percent of the shipping bank's total exposure, while the five biggest debtors accounted for 44 percent of total gross lendings.

"Most European specialised lenders do not display this type of profile and indeed financial institutions regulated by banking law would not be permitted such concentrations," says Moody's in its latest credit evaluation of Danish Ship Finance, from April 2014. An evaluation that explains why Danish Ship Finance, in spite of extremely modest losses during the global financial and shipping crisis, holds a Baa2 rating, just two notches away from a junk rating, which would, among other things, make it difficult for investors such as pension funds to acquire ship credit bonds.

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