Credit rating agency, CARE has assigned a `AA` rating to the proposed Long-term Non Convertible Debenture (NCD) Issue of Mercator Lines (Q,N,C,F)* (MLL).

CARE has reaffirmed the AA rating assigned to the outstanding Long-term NCDs and Long-term Bank Facilities of MLL.

Further, CARE has reaffirmed the AA-(RPS) [Redeemable Preference Shares]) rating assigned to RPS of MLL.

Instruments/Facilities with this rating are considered to offer high safety for timely servicing of debt obligations. Such instruments/facilities carry very low credit risk.

Also, CARE reaffirmed the PR1+ rating assigned to the Short-term Bank Facilities and Short-term NCDs of MLL.

Facilities/Instruments with this rating would have strong capacity for timely payment of short-term debt obligations and carry lowest credit risk.

CARE assigns `+` or `-` signs to be shown after the assigned rating (wherever necessary) to indicate the relative position within the band covered by the rating symbol.

Rating Rationale

The ratings factor in MLL`s well-entrenched position in shipping industry, experienced management, improved profitability and leverage parameters, existing fleet capacity and substantial size of operations, judicious mix of time charter and spot contracts, diversification in the dredging segment, favourable liquidity position and improved financials on a consolidated basis.

The ratings are, however, constrained by MLL`s increased level of financial support to subsidiaries/business associates by way of guarantees and Letter of Comfort (LC), inherent cyclical nature of the shipping industry and volatility of freight rates.

The company`s ability to generate sufficient cash flow in view of the volatile freight rates as well as slowdown in the global economy is the key rating sensitivity.

Shares of the company gained Rs 1.5, or 2.54%, to settle at Rs 60.65. The total volume of shares traded was 581,379.00 at the BSE (Wednesday).