[150911.EN.SEA] Moody's Adds CMA CGM Downgrade S&P's -'Firm Still Has Strong Profile'

MOODY'S credit rating agency joined rival Standard & Poors (S&P) in downgrading the outlook for the French shipping giant CMA CGM, but still rated the Marseilles-based line as having a "strong business profile".

Earlier, S&P analyst Izabela Listowska said: "The negative outlook reflects our view that CMA CGM will likely need to take preventative action to avoid breaching its financial covenant tests due in December."

Moody's downgraded the corporate group and probability of default ratings of CMA CGM to B1 from Ba3. It also downgraded the company's US$455 million and $475 million senior unsecured notes to B3 from B2.

"The outlook is negative . . . triggered by the combined effect of several negative factors that have emerged during recent months and which are not only affecting CMA CGM's credit profile, but may also have prolonged negative implications," said Moody CMA CGM analyst Marco Vetulli.

"CMA CGM's lacklustre performance in recent months was due to intense competition between market players which limited the company's capability to recover the increase in bunker costs incurred by container shipping operators during the second quarter," said Mr Vetulli.

CMA CGM has rebutted reports earlier this week from Bloomberg that the company is in imminent danger of defaulting on loan obligations.

The newswire's report, based on figures from its in-house Bloomberg Bond Trader service, calculated CMA CGM has a nine-in-10 chance of breaching its loans within five years based on falling ocean freight rates and bond prices.

The line has argued Bloomberg's analysis is based on a theoretical financial model that doesn't accurately capture CMA CGM's secure position atop an admittedly troubled industry.

"CMA CGM acknowledges S&P's decision," company financial spokesman Guillaume Foucault told American Shipper. "The group notes it has been ranked as the No 1 player in the shipping industry by [Paris-based maritime consultant] Alphaliner and remains focused on client services and business development. As it has shown in the past, CMA CGM maintains a transparent and constructive dialogue with its financial partners that are perfectly aligned on Group's objectives."

Source : HKSG.