Moody's cuts U.S. Shipping loans to Ba3

Moody's Investors Service said it downgraded the ratings of U.S. Shipping Partners LP's amended senior secured credit facilities to Ba3 from Ba2, reflecting constraints placed on the company's credit profile from the creation of a master limited partnership structure into which these facilities are to be placed.

Moody's also assigned a senior implied rating of Ba3 and issuer rating of B1. The outlook is stable.

These facilities, currently issued by United States Shipping Master LLC, were amended and are to be reduced with proceeds from a $126 million equity offering from the newly created U.S. Shipping Partners LP.

Moody's said the ratings are restrained by U.S. Shipping's master limited partnership structure, which by nature is a depleting capital structure that is highly dependent upon its ability to continuously access the capital markets for debt repayment/refinance or to fund the acquisitions. Furthermore, Moody's said it is concerned that future investments in vessels, possibly motivated by increased returns despite potentially higher operating risks, may negatively affect credit fundamentals of the partnership.

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