S&P: CMA CGM on positive watch

Standard & Poor's said the B- long-term corporate credit rating on CMA CGM SA and the CCC rating on the company's senior unsecured notes remain on CreditWatch with positive implications.

The recovery rating is unchanged at 6, indicating 0% to 10% expected default recovery.

The ratings were placed on CreditWatch in February.

The CreditWatch status reflects an expectation that CMA CGM's liquidity will likely improve in the short term if the company successfully finalizes its outstanding measures to increase liquidity sources, S&P said.

CMA CGM's liquidity profile could strengthen if the group successfully closed the disposal of a 49% stake in terminal link to China Merchants Holdings (International) Co. for €400 million in cash, as announced in February, the agency said, along with its equity deal with Fonds Strategique d'Investissement, which agreed in January to subscribe to bonds redeemable in shares of CMA CGM for $150 million.

Both transactions are subject to regulatory approval, which will likely be granted over the next few weeks, S&P said.

The ratings continue to be constrained in the short term by the company's less than adequate liquidity profile, high debt and exposure to the cyclical, capital-intensive and competitive container shipping industry, the agency said.

These risks are partly offset by CMA CGM's leading global market position, diverse route network, high-quality and competitive fleet, S&P said, and above-industry-average profitability.

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