S&P raises rating on CMA CGM

   The rating agency Standard and Poor’s said CMA CGM’s liquidity has improved since it closed on a financial restructuring and equity deal.
   S&P on Thursday raised its corporate credt rating on the French container carrier to B- from CCC+ and the issue rating on the company’s senior unsecured notes to CCC from CCC-.
   “The rating remains on CreditWatch with positive implications, as we could raise our ratings on CMA CGM within the next three months if its liquidity improved, as we expect,” S&P said.
   “We understand that CMA CGM has reached a final agreement with its lender syndicate over the financial restructuring, which provides a better
distribution of the company’s debt maturity profile and amendment of the covenant package to ensure sufficient headroom. Meanwhile, the company has
finalized an equity deal with the Turkish holding company Yildirim Group, which has subscribed to bonds redeemable in shares of CMA CGM for $100
million, which CMA CGM received in February 2013,” the rating agency added.
   “We note that the company’s liquidity position is further underpinned by its significantly improved operating performance and, therefore, cash flow generation, mainly thanks to the realized cost efficiencies. In the first nine months of 2012, the company reported positive operating cash flow (after interest paid) of $395 million compared with about $25 million in 2011,” S&P said. 
   S&P believes CMA CGM’s liquidity could improve further over the coming months if it successfully closes on the disposal of its 49 percent stake in Terminal Link to China Merchants Holdings for 400 million euros ($519 million) in cash, and on a deal to sell convertible bonds to the French government’s Fonds Strategique d’Investissement. It said both of these transactions are subject to regulatory approvals, which are likely to be granted by the end of May 2013. – Chris Dupin