- Container shipping has performed strongly despite the pandemic.
- Hapag-Lloyd with robust operating performance in the current market environment.
- Debt reduction has clearly exceeded expectations.
According to a press release published by Hapag Lloyd, The rating agencies Moody’s Investor Service (Moody’s) and Standard & Poor’s Global Rating (S&P) have published updated credit ratings for Hapag-Lloyd.
Moody’s upgrade
Moody’s raised Hapag-Lloyd’s credit rating by one notch, from ‘Ba3’ to ‘Ba2’. In addition, the rating for its senior unsecured bonds improved from ‘B2’ to ‘B1’. The ratings have been assigned a ’stable’ outlook.
Pandemic growth
Moody’s acknowledged that container shipping has performed very strongly despite the pandemic. It positively highlighted Hapag-Lloyd’s debt reduction in the second half of the year, which was well above expectations. At the same time, the rating actions also take into
account Hapag-Lloyd’s prudent financial policy, which is reflected not least in its leverage ratio (net debt to EBITDA), with a basic target of less than 3.0x and significant improvement to 1.8x by yearend 2020.
S&P’s Upgrade
Furthermore, S&P upgraded Hapag-Lloyd’s credit rating from ‘BB-’ to ‘BB’ with a ’stable’ outlook. At the same time, the rating for its senior unsecured bonds was raised by three notches, from ‘B’ to ‘BB’. S&P reasoned that Hapag-Lloyd’s EBITDA performance of EUR 2.7 billion in 2020 was above the original expectations of EUR 2.0 billion. Moreover, the rating agency noted that Hapag-Lloyd’s strong operating performance can particularly be attributed to a significant increase in freight rates in the fourth quarter and was also assisted by low bunker prices and successful cost-reduction measures. It was also positively mentioned that Hapag-Lloyd has used the strong free operating cash flow of 2020 to further reduce debt.
Hapag Lloyd CFO’s Remarks
“We are very pleased that Moody’s and S&P have once again positively recognised our earning power as well as our progress in reducing debt and the improvements in our balance sheet structure. With these rating upgrades, we are also looking at the highest credit ratings that Hapag Lloyd has received since the research initiation of Moody’s and S&P. Looking forward, we will continue pursuing our prudent financial policy while keeping a close eye on our costs. In addition, we will maintain our present course and continue to rigorously implement our Strategy 2023,” said Mark Frese, Chief Financial Officer of Hapag-Lloyd AG.
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Source : Hapag Lloyd
