CITING "deteriorating credit metrics", Moody's Investors Service has downgraded from "stable" to "negative" some debt instruments issued by the French shipping giant CMA CGM.
Moody's said CMA CGM will be further pressured next year because of its commitments to fund major capital expenditure in a period of slower growth and expected over-capacity in the shipping market.
The affected instruments are CMA CGM SA's Ba1 Corporate Family Rating (CFR) and on the A3 rating of the $253.7 million, 5.562 per cent Class A Corporate Asset Backed Secured Notes due 2021 issued by Vega ContainerVessel 2006-1 Public Limited Co., the issuer for a transaction designed to finance CMA CGM's container vessels, reported Newark's Journal of Commerce, adding that Moody's made the downgrade December 16.
Said Milan-based Moody's vice president Marco Vetulli (also the analyst covering the CMA CGM dossier): "The change of outlook to negative reflects concerns over the uncertainty of the extent to which the current challenging environment will continue to exert pressure on CMA CGM's credit profile.
"Moody's recognises that the company is implementing measures to counter the current difficult market conditions, such as postponing instalments on some of the capital spending that was due in 2009 to 2010 and reducing charter-in fleet during 2009," he said.
"Such measures, together with a decrease of both bunker costs and chartering costs, should reduce the negative pressure on CMA CGM's operating margins. However, Moody's remains concerned about the execution risk associated with the company's plan," said Mr Vetulli.
Moody's said CMA CGM will be further pressured next year because of its commitments to fund major capital expenditure in a period of slower growth and expected over-capacity in the shipping market.
The affected instruments are CMA CGM SA's Ba1 Corporate Family Rating (CFR) and on the A3 rating of the $253.7 million, 5.562 per cent Class A Corporate Asset Backed Secured Notes due 2021 issued by Vega ContainerVessel 2006-1 Public Limited Co., the issuer for a transaction designed to finance CMA CGM's container vessels, reported Newark's Journal of Commerce, adding that Moody's made the downgrade December 16.
Said Milan-based Moody's vice president Marco Vetulli (also the analyst covering the CMA CGM dossier): "The change of outlook to negative reflects concerns over the uncertainty of the extent to which the current challenging environment will continue to exert pressure on CMA CGM's credit profile.
"Moody's recognises that the company is implementing measures to counter the current difficult market conditions, such as postponing instalments on some of the capital spending that was due in 2009 to 2010 and reducing charter-in fleet during 2009," he said.
"Such measures, together with a decrease of both bunker costs and chartering costs, should reduce the negative pressure on CMA CGM's operating margins. However, Moody's remains concerned about the execution risk associated with the company's plan," said Mr Vetulli.