"Moody's Downgrades Maersk"

From MarineLink, Dec.9:

Moody's Investors Service has downgraded ratings for AP Moller-Maersk after a review of the Denmark-based shipping and oil company. Moody's expressed concerns about lower economic growth and the US-China trade war.

"The downgrade reflects our expectation that Maersk will face increased market and execution risks and, as a result, operate at a higher leverage than is commensurate with a Baa2 rating for a company in such a volatile and cyclical business as container shipping," said Maria Maslovsky, Moody's Vice President -- Senior Analyst and the lead analyst for Maersk.

"However, we acknowledge Maersk's leadership position as a liner and container terminal operator, as well as its strategy to integrate vertically into the logistics business and offer superior value to its customers," Maslovsky said.

In addition, we view positively the significant financial flexibility offered by the Total S.A. shares worth approximately USD5 billion which allows Maersk to continue with its transformation while at the same time protecting its balance sheet," added Maslovsky.

Moody's believes that Maersk will be able to remain within this leverage range given the company's leadership position in container shipping and terminals, as well as its successful integration efforts with respect to Hamburg Sud. Maersk indicated that it expects to exceed its guidance for synergies from the Hamburg Sud acquisition by at least $100 million - $150 million compared to initial guidance.

The downgrade further reflects significant downside risks facing the container shipping industry, in Moody's view....MORE