Moody’s Investors Service has changed to stable from positive the outlook on the Baa1 issuer rating and Baa1 senior unsecured ratings of Denmark-based shipping and oil company A.P. Møller-Mærsk A/S (Maersk).
“Our decision to change the outlook to stable from positive primarily reflects the challenging market conditions affecting most of Maersk’s business units, particularly its two largest, Maersk Line and Maersk Oil. It also factors in further anticipated deterioration in the group’s performance and financial profile in 2016, which will weakly position the company in its rating category,” says Marie Fischer-Sabatie, a Moody’s Senior Vice President and lead analyst for the issuer.
This outlook change to stable from positive reflects the challenging market conditions affecting most of Maersk’s business units and Moody’s expectations that the group’s performance and financial profile will further deteriorate in 2016, positioning the company weakly in its rating category.
While Maersk’s 2015 performance and credit ratios continued to position the group comfortably within its rating category with leverage (i.e., debt/EBITDA) at around 1.8x, Moody’s anticipates that the group’s financial profile will weaken in 2016.
The rating agency bases this forecast on its projection of average oil prices of around $33 per barrel in 2016, a continued decline in freight rates for container shipping and low single-digit volume growth in percentage terms.
The rating agency projects that Maersk’s credit ratios will be weak for its rating category in 2016, but will gradually recover in the following 12-18 months to levels in line with its current Baa1 rating.
Source: Moody’s
