Fitch Ratings has cut its assessment of Indonesian tanker owner Soechi Lines as leverage rose.
The agency said the long-term issuer default rating was downgraded to B from B+ with a stable outlook.
Its net leverage after the third quarter rose to five times from 4.6 times in 2017, Fitch said.
Persistent under-performance at its shipyard was the underlying reason for its relatively high debt profile, it added.
The ratings company had said previously it would consider action if Soechi was unable to cut this to below four times.
"We estimate Soechi's leverage will stay above four times over the next three years, which indicates a weaker financial profile," Fitch added.
But Soechi's management has stated it plans to lower growth-related spending and utilise higher EBITDA from past fleet growth to deleverage, it said.
"We expect some moderation in leverage from current levels on account of lower spending on ship acquisitions. However, the company's long-term intention to expand its fleet in line with domestic demand presents a risk to our forecasts," Fitch added.
Soechi's shipping business was described by the agency as "relatively stable", underpinned by its "robust position" and regulatory cabotage protection in a steadily growing market.
"Soechi plans to cut its growth capex in 2019 to reduce leverage and we think the company has the ability to do so," Fitch said.
The shipowner is the largest independent tanker operator in a fragmented domestic shipping industry with a large number of small players.
