1. Introduction
2. Literature Reviews
2.1 Shipping industry
Table 1
2.2 Debt Repayment Capability
3. Research design
3.1 Variables and hypotheses
1) Loan nature
H1: The lower loan to value (LTV), the higher the possibility of debt repayment. In other words, there is a high possibility that the credit rating of the company will be equal to or higher after the loan.
H2: The longer the loan tenor at the time of approval, the higher the possibility of debt repayment. In other words, there is a high possibility that the credit rating level will be the same or higher.
H3: If the spread is high, the possibility of debt repayment decreases. In other words, there is a high possibility that the credit rating will be lowered.
H4: Syndicated loans increase the likelihood of debt repayment compared to single loans. In other words, there is a high possibility that the credit rating level will be the same or higher.
H5: If there is a put option, the possibility of debt repayment is lower than if it is not. In other words, there is a high likelihood that the credit rating will decline.
2) Financial nature
H6 : The lower a company's debt ratio is, the more likely it is to repay its debt. In other words, there is a high possibility that the credit rating of the company will be equal or higher.
H7: The higher the quick ratio, the higher the possibility of debt repayment. In other words, it is highly likely that the credit rating of the company will be the same or higher.
H8: The higher the net profit-to-sales ratio, the higher the possibility of debt performance. In other words, there is a high possibility that the credit rating will be the same or higher.
H9: The higher the debt service coverage ratio (DSCR), the higher the possibility of debt repayment. In other words, there is a high possibility that the credit rating will be the same or higher.
H10: The higher the total asset turnover ratio, the higher the possibility of debt repayment. In other words, there is a high possibility that the credit rating will be the same or higher.
3) Company nature
H11: The longer the business is, the higher the possibility of debt performance. In other words, there is a high possibility that the credit rating of the company will be the same or higher.
H12: The higher CEO’s shares at the time of loan approval, the lower the possibility of debt repayment. In other words, there is a high possibility that the credit rating of the company will be the same or higher.
H13: It is more likely that unlisted shipping companies will perform their debts rather than listed. In other words, it is highly likely that the credit rating of unlisted shipping companies will be the same or higher.