Moody’s and Standard & Poor’s Upgrade Hapag-Lloyd

The shipping company Hapag-Lloyd impresses with a strong operational performance in the current market environment and has therefore been upgraded by the rating agencies Moody’s and Standard & Poor’s (S&P). The debt reduction is significantly above expectations. Container shipping has developed strongly despite the pandemic.

(Hamburg) The rating agencies Moody’s Investor Service (Moody’s) and Standard & Poor’s Global Rating (S&P) have today published updated credit ratings for Hapag-Lloyd.

According to Moody’s, Hapag-Lloyd’s credit rating has been raised by one notch from “Ba3” to “Ba2”. Additionally, the rating for senior unsecured bonds improved from “B2” to “B1”. The ratings come with a stable outlook. Moody’s acknowledged that container shipping has developed very strongly despite the pandemic. The significantly better-than-expected debt reduction in the second half of the year was positively highlighted for Hapag-Lloyd. The rating action also takes into account Hapag-Lloyd’s cautious financial policy, which is reflected in the debt ratio (net debt to EBITDA) with a fundamental target of less than 3.0x and a significant improvement to 1.8x by the end of 2020.

Strong Operational Performance

Furthermore, S&P has raised Hapag-Lloyd’s credit rating from “BB-” to “BB” with a “stable” outlook. At the same time, the rating for senior unsecured bonds was raised by three notches from “B” to “BB”. S&P argued that Hapag-Lloyd’s EBITDA performance of 2.7 billion euros in 2020 exceeded the original expectations of 2.0 billion euros. The strong operational performance is particularly attributed to a significant increase in freight rates in the fourth quarter, supported by low bunker prices and successful cost-cutting measures. It was also positively noted that Hapag-Lloyd used the strong free operational cash flow of 2020 for further debt reduction.

Mark Frese, CFO of Hapag-Lloyd AG: “We are very pleased that Moody’s and S&P have once again positively recognized our earning power as well as our progress in debt reduction and improvements in our balance sheet structure. With these rating upgrades, we are looking at the highest credit ratings that Hapag-Lloyd has received since the initiation of research by Moody’s and S&P. Looking ahead, we will continue our prudent financial policy while keeping a close eye on our costs. Moreover, we will stick to our existing course and consistently implement our Strategy 2023.”

Photo: © Hapag-Lloyd