S&P cuts some Wan Hai bonds to BB+

Standard & Poor's said it affirmed the BBB- long-term corporate credit rating on Wan Hai Lines Ltd.

The agency lowered the rating on fully owned subsidiary Wan Hai Lines (Singapore) Pte. Ltd.'s unsecured corporate bonds to BB+ from BBB-. Wan Hai irrevocably and unconditionally guarantees the bonds.

The outlook is stable.

According to S&P, the affirmation reflects Wan Hai's stable performance on intra-Asia routes, together with strong demand on Middle East and European routes, which improved its EBITDA margin in 2007.

Ratings reflect a somewhat aggressive new capacity expansion plan, cyclical demand and potential oversupply, the agency said.

Wan Hai has increased its exposure to the highly competitive and volatile long-haul markets, which could enlarge its revenue base and profitability, but also raise its earnings volatility, the agency added.

The downgrade on unsecured corporate bonds reflects Wan Hai's rising ratio of priority debt to adjusted assets, S&P noted.

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