Standard & Poor ups ratings for Japanese giants

STANDARD & Poor has raised its assessment of major Japanese shipowners Mitsui OSK Lines (MOL) and K Line. MOL went up one notch from BBB to BBB+. S&P cited the following reasons for the upgrade: 1. Improvement in cash flow stability through efforts to expand sources of stable income and moves to increase the number of long-term contracts, mainly in Dry Bulk and Tanker segments. 2. The policy of intensively focusing management resources on the shipping business is expected to further strengthen the company’s business franchise as it plans to start using new, highly-cost-competitive vessels, which were ordered before rises in ship construction costs. 3. Given the prospects of solid business performance in the near term, the ratio of net debt to total capitalization (after marking adjustments for leases) is expected to remain on a stable, improving trend. Meanwhile K Line's rating went up from from BBB- to BBB. According to S&P the improved rating was justified because: 1. Cash flow stability has further improved as has its resilience to adverse market conditions. In addition, financial resilience to deterioration in business conditions has been strengthened by the increased accumulation of retained earnings, backed by strong business performance. 2. The company is steadily enhancing its resilience to market fluctuations through its efforts to further strengthen cost competitiveness, to expand its stable car carrier segment, and to increase the number of long-term contracts in its dry bulk and oil carrier segments.