[260911.EN.SEA] S&P Downgrades Hapag-Lloyd Outlook To Negative, But Retains BB+ Rating

TOP rating agency Standard & Poor's revised its outlook for German container shipping company Hapag-Lloyd from "stable" to "negative" but retained its old BB+ credit rating.

"The outlook revision reflects Hapag-Lloyd's lower profitability in the first half of the year," said S&P credit analyst Izabela Listowska, reported Newark's Journal of Commerce. "We believe the company's cash flow protection measures may now fall short of the levels we view as rating-commensurate."

Hapag-Lloyd, the world fifth largest container carrier, joins Marseilles-based CMA CGM, the world's third biggest, and MISC Berhad of Malaysia, in having its outlook downgraded.

Said Hapag-Lloyd chairman Michael Behrendt: "I see the rating confirmation as the result of our swift response to the challenges our industry is currently facing. Our solid corporate financing was also supporting."

Hapag-Lloyd said its operating profit in the first two quarters of 2011 put it well above the industry average, but rising bunker costs and depressed freight rates and resulting from overcapacity on the key Asia-Europe route, dragged down its prospects.

Moody's rating agency also issued a negative outlook for Kuala Lumpur-based shipping company MISC Berhad, citing credit weaknesses, and cutting the rating for the world's 26th biggest container line to Baa1 from A3.

The agency pointed to the shipowner-operator's credit metrics, reported London's Lloyd's List, citing losses in its container, chemical and petroleum divisions, and capital expenditure plans amid the tough operating environment.

Moody's and Standard & Poor's are tied for first place among global rating agencies, and have a combined market share of 80 per cent, according to London's Economist newspaper. Together with Fitch, the number three agency, they have over 95 per cent market share.

Source : HKSG.