Moody’s raises Hapag-Lloyd to stable

Moody's Investors Service said it changed the outlook on the B2 corporate family rating, the B2-PD probability of default rating and the Caa1 senior unsecured rating of Hapag-Lloyd AG to stable from negative.

Concurrently, the agency affirmed the ratings.

The outlook change reflects the reduction in adjusted debt due to changes in Moody's approach for capitalizing operating leases. The updated approach for standard adjustments for operating leases is explained in the cross-sector rating methodology Financial Statement Adjustments in the Analysis of Non-Financial Corporations, published on June 15.

Moody’s said the change reflects the improvement in Hapag-Lloyd's financial metrics due to the material reduction in the debt adjustment related to operating leases.

Based on 2014 financial statements, Moody's debt adjustment related to operating leases declines to €1.5 billion from €3.9 billion. Even though the decline is material, Hapag-Lloyd's leverage at year-end 2014 remains very high for the B2 category at 9.6 times (13.8 times before the change in operating lease adjustment) due to the company's weak operating performance during the year.

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