A.P. Moller - Maersk – Credit Outlook: Stable | Bond Valuation: Neutral

Equity Research Analyst, Maritime sector, Drewry Maritime Financial Research

Ankush Kathuria CFA, FRM

Equity Research Analyst, Maritime sector

Maritime Sector, Equity & Credit Research

Drewry Maritime Financial Research

With no ties to other players in the shipping, finance or banking world, we provide a uniquely impartial view of the markets and companies we cover. Our parent organization, Drewry is a leading independent provider of research services to the maritime and shipping industry, employing over 100 professionals across an international network of offices in London, Delhi, Singapore and Shanghai. Combining our market-leading resources with seasoned sector expertise DFRS offers a highly differentiated and comprehensive range of investment and financial research services to lenders and prospective investors in publicly listed maritime and shipping companies. The full service of reports, supporting resources and sector orientated webinars provides our clients with the most complete picture of the organisations under coverage as is possible. We have been charting and analysing the world’s maritime markets for more than 40 years. This unrivalled intelligence and understanding provides the foundation of our research service. Our analysts have access to one of the most up-to-date, comprehensive and reliable sources of market insight and research data available today. We look at globally listed companies within the following sectors: Port Operators, Container Shipping, Container Manufacturing & Leasing, LNG Shipping, Dry Bulk Shipping and Tanker Shipping. Combine in-depth sector expertise with financial analysis focusing on over 50 stocks globally.

Credit

CMA CGM SA – Credit Outlook: Negative | Bond Valuation: UnattractiveCredit positives<ul><li>With fewer global carriers and narrowing supply demand imbalance, the industry could see a return to profitability after a long wait and CMA’s earnings could rebound.</li><li>CMA CGM is the world’s third largest container shipping company. It is part of the Ocean Alliance which is the largest operational agreement ever made between shipping companies (OOCL, Evergreen, Cosco, CMA CGM) with about 3.5m teu carrying capacity starting service in April 2017.</li><li>Post quarter, the group announced that it refinanced the NOL USD 1.1bn outstanding facility easing the debt maturity profile in line with maintenance financial covenants as of 3Q16. </li></ul>Credit negatives<ul><li>We continue to highlight the risks from the still high supply growth in 2017-18. Though the declining orderbook is a good sign, it is still large in absolute terms. Recovery if delayed will further push return to profitability. </li><li>Credit metrics worsened significantly during the 9M16 period on account of declining EBITDA and extra debt to finance the NOL acquisition.</li><li>S&amp;P downgraded CMA CGM by one notch to ‘B’ post FY15 results and assigned a negative outlook on the issuer. </li><li>Short-term debt obligations multiple to liquidity stands at 1.3x at end 3Q16. Pro forma figure is lower after the refinancing of the outstanding NOL acquisition facility.</li><li>From 1 January 2019, operating leases will be treated as finance leases and might add more pressure to credit metrics. A big portion of the CMA CGM’s fleet is currently lying off-balance sheet via lease agreements. </li></ul>

CMA CGM SA – Credit Outlook: Negative | Bond Valuation: UnattractiveCredit positivesWith fewer global carriers and narrowing supply demand imbalance, the industry could see a return to profitability after a long wait and CMA’s earnings could rebound.CMA CGM is the world’s third largest container shipping company. It is part of the Ocean Alliance which is the largest operational agreement ever made between shipping companies (OOCL, Evergreen, Cosco, CMA CGM) with about 3.5m teu carrying capacity starting service in April 2017.Post quarter, the group announced that it refinanced the NOL USD 1.1bn outstanding facility easing the debt maturity profile in line with maintenance financial covenants as of 3Q16. Credit negativesWe continue to highlight the risks from the still high supply growth in 2017-18. Though the declining orderbook is a good sign, it is still large in absolute terms. Recovery if delayed will further push return to profitability. Credit metrics worsened significantly during the 9M16 period on account of declining EBITDA and extra debt to finance the NOL acquisition.S&amp;P downgraded CMA CGM by one notch to ‘B’ post FY15 results and assigned a negative outlook on the issuer. Short-term debt obligations multiple to liquidity stands at 1.3x at end 3Q16. Pro forma figure is lower after the refinancing of the outstanding NOL acquisition facility.From 1 January 2019, operating leases will be treated as finance leases and might add more pressure to credit metrics. A big portion of the CMA CGM’s fleet is currently lying off-balance sheet via lease agreements. 

CMA CGM SA – Credit Outlook: Negative | Bond Valuation: Unattractive