Moody’s has upgraded the ratings of two companies in the maritime transportation sector. Firstly, CMA CGM, based in Marseille, has seen its corporate group rating rise from Ba2 to Ba1 with a stable outlook. Despite the deteriorating container market conditions, the company is expected to maintain its rating.
CMA CGM has reinvested its earnings into the business instead of paying significant dividends to shareholders, which has contributed to its low leverage and a more diversified business profile. Moody’s highlights that cost reduction and pricing discipline will be important in limiting the impact of supply excess in the sector over the next 18 months. Additionally, CMA CGM has proposed acquiring Bolloré’s logistics business, which could enhance its commercial diversification and establish it as one of the world’s leading third-party logistics companies.
Secondly, Moody’s has upgraded the rating of Global Ship Lease (GSL) from B1 to Ba3 with a stable outlook. This improvement is based on the company’s debt reduction, increased scale, and higher charter rates. GSL is expected to use its cash flow judiciously for fleet growth. However, Moody’s also notes that GSL’s earnings are expected to decline in 2024 and 2025 due to increased charter renewal risk.
On the other hand, Moody’s has not made any updates to the ratings of other sector operators such as Maersk and Hapag-Lloyd. However, Danaos Corp’s outlook has changed from stable to positive, indicating the possibility of a ratings review in the short to medium term.
Source: Alphaliner
