The much discussed downgrading by the rating bureau Moody’s of Danish Ship Finance and a long line of other banks and financial institutions has forced the shipping financers to issue a stock exchange announcement on Wednesday concerning the risk of increased financing costs, and thus also the risk of more expensive loans.
“Issuer’s (Danish Ship Finance, ed.) Issuer Rating and the rated bonds have in the years 2009 to 2012 had the grade A2. In May 2012, Danish Ship Finance was downgraded by Moody’s Investors Service, which primarily bases the downgrading on a negative view on shipping, the company’s debtor concentration, and the fact that the company’s finances are based solely on the issuing of bonds. Bonds issued by Danish Ship Finance have now been given a Baa2 rating with a negative outlook by Moody’s Investors Service, and the company’s Issuer Rating is similarly Baa2 with a negative outlook,” writes Danish Ship Finance:
“When Moody’s decides to assign the issuer or a bond a lower rating it can have a negative effect on the price of bonds. For the issuer, the result of a downgrading can be bigger financing costs. A downgrading can therefore have a negative effect on the issuer’s business opportunities and results.“
Danish Ship Finance strongly resents the downgrading by Moody’s:
“Some things are law, and it has been like that with us for 50 years. We haven’t changed, but Moody’s has. It is our business model, plain and simple. It is not because there is any risk of us losing a lot of money or going out of business. We have done what we could, but it’s unfortunate that legislators (EU, ed.) are busy writing the rating bureaus into as many regulations as they are currently doing,” CEO Erik I. Lassen told ShippingWatch on May 31st.