KBRA Releases Report – Marine Fuels: Sailing Into Uncharted Waters

NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) releases its Marine Fuels: Sailing Into Uncharted Waters report, which discusses the dynamics and challenges faced by the shipping sector.

As we approach 2020, there continues to be heightened volatility around marine fuel prices due to the implementation of International Maritime Organization (IMO) restrictions on sulfur content. KBRA believes this situation is leading to ongoing market uncertainty surrounding the profitability of the shipping sector.

Key Takeaways Highlighted in the Report Include:

• IMO 2020 will likely have a significant impact on marine fuel costs. KBRA expects the additional costs due to compliance will top $60 billion over the next three years. In KBRA’s view, a large portion of these costs will be borne by the end customer, although there is still uncertainty in how these costs will be shared.
• Shipping companies that are unable to transfer fuel costs to their customers, or that have older, less efficient fleets—and do not have adequate finances to procure and install exhaust gas cleaning systems (scrubbers)—will have greater credit risk.
• Dislocation in the marine fuel markets will create opportunities for industry participants across multiple sectors including crude and product tankers, liquified natural gas (LNG) carriers, scrubber manufacturers, and refiners.
• IMO 2020 implementation will significantly impact the oil and gas refining value chain as refiners opt to produce a greater quantity of compliant fuels to service the shipping industry. This oil product shift will likely cause some disruption to the refined products market, leading to deeper implications for the overall economy.

The report also details the opportunities available to various stakeholders, including some outside of the marine sector.

To read the report, click here.

Related Publications: (available at www.kbra.com)

• Shipping Industry Continues to Look for Alternative Sources of Capital Amidst Consolidation
• An Updated View of Energy Firm Creditworthiness: Fundamentally Weaker or Battle Tested?
• Global Political Economy Is a Supporting Actor in Oil Sector Performance

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About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Analytical Contacts:

Manish Consul, Senior Director

(646) 731-2395

mconsul@kbra.com

Corinne Hill, Senior Director

(646) 731-3331

chill@kbra.com

Danise Chui, Senior Director

(646) 731-2406

dchui@kbra.com

Joan Feldbaum-Vidra, Managing Director

(646) 731-2362

jfeldbaumvidra@kbra.com