PR: Moody’s upgrades Hapag-Lloyd to ‘Ba3‘

15/10/2020

Hapag-Lloyd announced Wednesday that rating agency Moody’s had raised its credit rating “by one notch from ’B1‘ with a negative outlook to ‘Ba3’ with a stable outlook”.

It added:

This is the highest credit rating assigned to Hapag-Lloyd since the rating initiation by Moody’s in 2010. Additionally, the senior unsecured bond rating was raised from ‘B3’ to ‘B2’.

Moody’s acknowledged that the container shipping market and in particular Hapag-Lloyd have performed very strongly and better than anticipated amidst the pandemic. As a consequence, Hapag-Lloyd’s credit metrics have continued to strengthen in the first half of 2020. The rating action also incorporates Hapag-Lloyd’s prudent financial policy as evidenced by significant debt reduction efforts over the last years.

Already last week the rating agency Standard & Poor’s (S&P) has raised the credit rating on Hapag-Lloyd from ’B+‘ to ‘BB-’ with a positive outlook.

To read the full post, please click here.

Moody’s added:

Notwithstanding currently strong market fundamentals, the rating action is based on Hapag-Lloyd’s efforts to continue to strengthen its balance sheet as well as continuously improving efficiency. This has been a continuous development since the merger with UASC was completed in 2017, from where reported financial debt has been decreased by around €1.0 billion until end of Q2 2020.

During the same time period, Moody’s-adjusted debt / EBITDA has decreased to 3.5x for the last twelve months ending June 2020 from 5.3x end of 2017. Moody’s also notes as positive the fact that free cash flow has been positive and growing every year since 2017; a trend we foresee will continue over the next couple of years absent any larger capex plans.

The full release can be found here.