Improved rating acknowledges the integration of United Arab Shipping
Rating agency Moody’s has upgraded Hapag-Lloyd’s corporate family rating (CFR) to B1 from B2 and its senior unsecured bond rating to B3 from Caa1. The outlook remains stable.
The improved rating acknowledges Hapag-Lloyd’s progress in integrating United Arab Shipping Company Limited (UASC) while reducing leverage and generating positive free cash flow on the back of tight cost management and increased efficiencies, Moody’s concluded in its press release published today.
Synergies with United Arab Shipping Company start to pay off
The rating upgrade reflects Hapag-Lloyd´s ability to achieve the level of expected synergies resulting from the UASC integration which helped to partially offset cost increases on the back of higher fuel costs.
Hapag-Lloyd has substantially reduced leverage since the merger with UASC and is expected to continue its deleveraging path. Moody’s also factors in an adequate liquidity as well as a positive free cash flow generation since 2017 and Hapag-Lloyd’s capabilities to remain cash generative going forward, which will help to further reduce debt.
Hapag Lloyd’s strong market position confirmed by Moody’s
Furthermore, Hapag-Lloyd’s modern and efficient fleet has allowed to reduce operating expenses per TEU despite increasing fuel costs. The stable outlook reflects Moody’s expectations of steady performance as a result of Hapag-Lloyd’s strong market position despite possible cost increases combined with a volatile freight rate environment.