Moody's downgrades French shipping giant CMA
Ratings agency Moody's said on Friday it was downgrading its ratings on French shipping giant CMA CGM, the world's third-biggest container mover.
The move came despite an announcement on Thursday from CMA CGM and rival Swiss-Italian MSC, the world's second-biggest shipper, of a partnership to share fleets to improve their performances.
Moody's said in a statement it was downgrading CMA CGM's corporate family rating (CFR) and probability of default rating (PDR) to B2 from B1.
It also downgraded to Caa1 from B3 its rating on 325 million euros ($439 million) and 475 million euros worth of senior unsecured notes maturing in 2019 and 2017, respectively.
It said its outlook was negative.
"The downgrade was triggered by CMA CGM's weak performance for the third quarter. As a result 2011 will be significantly weaker than estimated by Moody's last September translating into credit metrics that are likely to be very weak for the category at year end," Moody's said.
"This is linked to the poor performance of the industry during its peak season (between September and October) caused by the oversupply of vessels on the water that slashed freight rates to a very low level," it said.
In the first nine months of the year, CMA CGM saw turnover of $11 billion, a 5.2-percent increase on a 12-month basis, but its earnings before interest, taxes, depreciation, and amortisation (EBITDA) were only $672 million in the same period.
CMA CGM has suffered from debt problems and in September ratings agency Standard and Poor's also revised its outlook on the shipping giant to negative, warning that it was at risk of breaching conditions on its debt.
© 2011 AFP