The company’s medium-term note (MTN) program rating were also downgraded to (P)Baa3 from (P)Baa2. The rating outlook for all ratings is stable, Moody’s added.
“The downgrade reflects our expectation that Maersk will face increased market and execution risks and, as a result, operate at a higher leverage than is commensurate with a Baa2 rating for a company in such a volatile and cyclical business as container shipping,” said Maria Maslovsky, Moody’s Vice President — Senior Analyst and the lead analyst for Maersk.
“However, we acknowledge Maersk’s leadership position as a liner and container terminal operator, as well as its strategy to integrate vertically into the logistics business and offer superior value to its customers.”
“In addition, we view positively the significant financial flexibility offered by the Total S.A. shares worth approximately USD 5 billion which allows Maersk to continue with its transformation while at the same time protecting its balance sheet,” added Maslovsky.
Moody’s expects that Maersk will operate with a leverage of 3.0x — 3.5x measured as gross debt/EBITDA which is higher than the expectations for a Baa2 rating. The rating agency believes that Maersk will be able to remain within this leverage range given the company’s leadership position in container shipping and terminals, as well as its successful integration efforts with respect to Hamburg Süd.
The downgrade further reflects significant downside risks facing the container shipping industry. As the broad economic growth globally is expected to be less robust in 2019 as compared with 2018, global trade, the key demand driver for container shipping, is also likely to come under pressure, Moody’s explained.
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