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.
Moody’s raised Hapag-Lloyd’s credit rating by one notch, from ‘Ba3’ to ‘Ba2’. In addition, the rating for its senior unsecured bonds improved from ‘B2’ to ‘B1’. The ratings have been assigned a ’stable’ outlook. Moody’s acknowledged that container shipping has performed very strongly despite the pandemic. It positively highlighted Hapag-Lloyd’s debt reduction in the second half of the year, which was well above expectations. At the same time, the rating actions also take into account Hapag-Lloyd’s prudent financial policy, which is reflected not least in its leverage ratio (net debt to EBITDA), with a basic target of less than 3.0x and significant improvement to 1.8x by year-end 2020.
Furthermore, S&P upgraded Hapag-Lloyd’s credit rating from ‘BB-’ to ‘BB’ with a ’stable’ outlook. At the same time, the rating for its senior unsecured bonds was raised by three notches, from ‘B’ to ‘BB’. S&P reasoned that Hapag-Lloyd’s EBITDA performance of EUR 2.7 billion in 2020 was above the original expectations of EUR 2.0 billion. Moreover, the rating agency noted that Hapag-Lloyd’s strong operating performance can particularly be attributed to a significant increase in freight rates in the fourth quarter and was also assisted by low bunker prices and successful cost-reduction measures. It was also positively mentioned that Hapag-Lloyd has used the strong free operating cash flow of 2020 to further reduce debt.