Downgrade in share ratings was based on forecasts of falling crude oil and oil products production and supply along with a projected slump in tanker freight rates.
Jefferies analyst Douglas Mavrinac has downgraded his share ratings for leading crude oil tanker owners Overseas Shipholding Group, Inc (OSG) and Teekay Corporation.
According to him, both New York-listed companies have a large portion of their fleet operating in the spot markets where rates are expected to slip, reports said.
Teekay's ratings were cut from 'buy' to 'hold' while OSG's ratings were cut from 'hold' to 'under-perform', in a move which comes less than two months after he had already downgraded its (OSG's) ratings from 'buy' to 'hold'.
OSG's downgrade was recommended on suggestions that its stocks have little growth value if rates fall as expected.
Mavrinac had already said then in December that companies which relied heavily on the spot market would be in for a rough ride on the back of ?significantly weaker? rates in 2009.
That forecast had prompted him to downgrade the ratings for Frontline Ltd. and Nordic American Tanker Shipping Ltd from 'hold' to 'under-perform'.
Meanwhile, Mavrinac is not the only industry watcher to have expressed pessimism for major crude oil tanker players like OSG heading into 2009.
Standard & Poor's (S&P) Ratings Services on January 21 dropped its outlook on OSG from 'stable' to 'negative'.
S&P said its downgrade was based on forecasts of falling crude oil and oil products production and supply along with a projected slump in tanker freight rates.
OSG apparently 'retaliated' with an announcement that it has raised some $387 million in asset plays over these few months.
?Vessel sale and sale/leaseback transactions generated total proceeds of approximately $194 million in the fourth quarter of 2008 and are expected to generate approximately $193 million in the first quarter of 2009,? said OSG in a press release.
?These amounts, together with cash from operations and available credit, provide the company with ample liquidity as it heads into 2009,? it added.