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May 30, 2008

R&I Boosts Credit Rating for MOL from A+ to AA-

TOKYO - Mitsui O.S.K. Lines, Ltd. (MOL, President: Akimitsu Ashida) today announced that Rating and Investment Inforamtion, Inc. (R&I) raised its Issuer Rating* on MOL by one notch from "A+" to "AA-", and also its Short-term Rating on MOL's Commercial Papers upto "a-1+" effective on May 30.

R&I cited four main reasons for the upgrade.

  • The bulkship freight rate market remains high due to developing nations' active demand for resources, which projected to grow. At the same time, more remote sources of raw materials require longer transport distances.
  • The company has quickly seized opportunities arising from the rapid expansion of ocean shipping, for example, with its iron ore carriers. As a result, profits increased rapidly, and MOL's consolidated ordinary income has ranked top among the three Japanese major ocean shipping companies since fiscal year (FY) 2003, ended March 2004. The company is forecasting stable profits of ¥123 billion for FY2008 and ¥153 billion for FY2009 thanks to mid- and long-term transport contracts. R&I anticipates that MOL can maintain high-level profits for the foreseeable future.
  • Looking at the "2010 issue" of fleet demand and supply, R&I expects the fleet supply to be lower than the initial forecast as a result of the subprime loan crisis and delays in supplying steel plates for shipbuilding. It is unlikely that the freight rate market will drop significantly, considering the number of overage vessels to be scrapped and strong demand in developing countries.>
  • R&I expects MOL's financial base to be further reinforced by accumulated profits. The shareholders' equity for FY2007 ended March 2008 is ¥ 680.8 billion, which is the highest of all Japanese ocean shipping companies. Though changes in the freight market, appreciation of the yen, and bunker price increases are factors for concern, it is expected that financial base of the company, which has a much stronger profit-earning capacity, will grow by absorbing risks of ocean shipping business and reach a high level.

*Issuer Rating
Credit rating that indicates assuredness of capabilities to execute debts and credits of issuers, and does not apply to specific bonds.

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