Moody’s revises Nippon Yusen to stable

Moody's Japan K.K. said it revised Nippon Yusen Kabushiki Kaisha's (NYK) outlook to stable from negative and affirmed its Baa2 long-term issuer rating.

The outlook change was driven by the reduction in the company's adjusted debt resulting from revision in Moody's approach for treating operating leases, as outlined in Moody's updated Financial Statement Adjustments in the Analysis of Non-Financial Corporations published on June 15.

The change in the agency’s approach to adjust for operating leases has significantly reduced Nippon Yusen’s adjusted financial leverage. The company’s adjusted debt/EBITDA for March 31, 2014 would be about 6.6 times under the revised methodology, compared to about 7.9 times under the previous methodology.

"The deleveraging is material and, combined with the recent operating performance improvements, has led us to expect that NYK's leverage will remain at levels materially lower than we had previously anticipated," Moody's vice president and senior analyst Mariko Semetko said in a news release.

Based on the preliminary earnings release and Moody's estimates for adjustments, leverage likely came down further to a mid-5-times range for March 31, 2015 using the updated lease adjustments.

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