S&P upgrades Hapag-Lloyd

S&P said it upgraded the issuer rating for Hapag-Lloyd to BB- from B+ and its senior unsecured debt rating to B from B-.

“The Covid-19 pandemic and the resulting economic recession have had a less severe effect on global trade than we previously anticipated. In their most recent quarterly reports, leading container liners communicate steeper-than-expected demand recovery and firm freight rates,” S&P said in a press release.

In the first half of 2020, Hapag-Lloyd reported EBITDA of €1.17 billion up from €960 million in the first six months of 2019. “Under our base case, we expect this positive momentum to continue toward year-end 2020, with S&P Global Ratings-adjusted EBITDA of about €2 billion for the full year,” S&P said.

The agency assigned a positive outlook. “The positive outlook indicates that Hapag-Lloyd could maintain S&P Global Ratings-adjusted funds from operations (FFO) to debt of more than 25%, our threshold for a BB rating, if a rebound in trade volumes and the container shipping industry's pricing discipline enables the company to maintain its solid EBITDA performance, and if Hapag-Lloyd keeps allocating excess cash flow to debt reduction,” S&P said.

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