Standard & Poor’s raised CMA CGM’s long-term corporate credit rating, citing the French ocean carrier’s improved liquidity following its recent financial restructuring and equity deal.
But CMA CGM still remains on CreditWatch “with positive implications,” the U.S. ratings agency said as it raised the Marseilles-based carrier’s rating to “B-minus” from “CCC-plus.”
Standard & Poor’s also raised its issue rating on CMA CGM’s senior unsecured notes to “CCC” from “CCC-minus.”
The improved rating followed CMA CGM’s announcement in February that it had agreed a deal with its banks to restructure its $4.6 billion of net debt and had finalized an equity deal with Turkey’s Yildirim Group that subscribed to $100 million of bonds redeemable in its shares.
“We note that the company’s liquidity position is further underpinned by its significantly improved operating performance and, therefore, cash flow generation, mainly thanks to the realized cost efficiencies,” the ratings agency said.
CMA CGM reported positive operating cash flow, after interest paid, of $395 million in the first nine months of 2012, compared with about $25 million in the same period in 2011.
CMA CGM’s liquidity could improve further over the coming months if it successfully closes the 400 million euros ($520 million) disposal of a 49 percent stake in its Terminal Link port unit to China Merchant Holding and a $150 million equity deal with FSI, France’s sovereign investment fund, Standard & Poor’s said.
Successful completion of these deals could “resolve” the CreditWatch, the ratings agency said. “We could raise the rating on CMA CGM, most likely by one notch, if its liquidity improved markedly and sustainably and its credit measures appeared to be consistently commensurate with the high rating.”
But it could “affirm or lower the ratings if the disposal or equity deal were delayed or did not materialize.”