Moody's Rates CMA CGM Again

Moody's Rates CMA CGM Again

Moody's assigned a provisional Ba3 rating to CMA CGM and judged the outlook for the world's third largest ocean container carrier as stable.

The rating is the first since June 2009, when, at the carrier's request, Moody's withdrew all ratings for CMA CGM. Since then, the company has undergone a radical restructuring.

The ratings agency said the corporate family and probability of default ratings are provisional as they are contingent on the French carrier's successful conclusion of its financial restructuring and issuance of an $800 million bond offering.

The rating "reflects the current weakness of CMA CGM's credit metrics despite its high business profile," said Marco Vetulli, vice president-senior credit officer and lead analyst of CMA CGM for Moody's.

"Moody's expects that the company's still sizeable capital investment plan will limit its free cash flow generation and, as a result, that its credit metrics will remain weak in the near future, thus constraining the upside potential of the rating in the near term."

Vetulli said the rating also reflects the need for CMA CGM to reinforce its capital structure in order to meet the contrasting challenges of improving its financial profile and making the necessary investments to maintain its current market share in a more mature operating environment.

The entry of Turkey's Yildirim as a new shareholder represents CMA CGM's first step towards diversifying its capital structure, but Moody's said this is not sufficient on its own to achieve the required improvement in the carrier's finances.

The stable outlook on CMA CGM's ratings reflects Moody's view that after the market recovery, the agreement signed with Yildirim and the signing of restructuring agreements with its banks, the Marseilles-based carrier will have stabilized its capital structure and liquidity profile.

Moody's said it expects CMA CGM to perform "relatively well" in a satisfactory year for container shipping in 2011.

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