Standard & Poor’s downgraded CMA CGM’s debt to B- from B+, citing concerns over the French ocean carrier’s liquidity position in the coming months.
The ratings were also put on Credit/Watch Negative, reflecting the possibility of another downgrade within three months if the world’s third-largest carrier cannot improve its weakening liquidity and avert likely breaches of loan covenants.
Standard & Poor’s also lowered its issue ratings on CMA CGM’s debt to CCC from B-.
“We believe CMA CGM’s liquidity position will be increasingly constrained in the coming quarters if it cannot bolster its liquidity sources through asset disposals or amendments to its debt maturity profile,” the ratings agency said.
“CMA CGM reported significantly lower operating profits in 2011 than we had anticipated, owing to depressed freight rates and elevated operating costs.”
CMA CGM this week reported a net loss of $30 million in 2011 compared with a $1.6 billion profit in 2010. The loss would have been greater but for $350 million profits from asset sales, including the disposal of 50 percent of the Malta Freeport container terminal to Turkey’s Yildirim Group.
CMA CGM met with its bankers on Tuesday, March 6, to discuss a rescheduling of its debt for 2012 and 2013; it hopes for an agreement by the end of June.
The Marseille-based carrier also plans to sell a minority stake in Terminal Link, its global container terminal unit, by the end of June.
Contact Bruce Barnard at firstname.lastname@example.org.