Moody’s rates Hapag-Lloyd notes Caa1

Moody's Investors Service said it assigned Caa1 rating to the proposed €150 million senior unsecured notes due 2022 issued by Hapag-Lloyd AG.

Hapag-Lloyd's B2 corporate family rating and B2-PD probability of default rating are unchanged.

The outlook is stable.

The proceeds from the issuance will be used to partially refinance the company’s existing $125 million senior unsecured notes due 2017.

The rating on the notes is two notches lower than the corporate family rating, reflecting not only their pari passu ranking with all of the company’s other unsecured debt, but also their contractual subordination to the secured debt existing within the group, Moody’s explained.

The combination with United Arab Shipping Co. adds both senior secured and senior unsecured debt, the agency said.

The ratings also consider the highly competitive environment in which the company operates, along with its reliance on short-term contracts, which limits market visibility, Moody’s said.

But the company does have a good business profile thanks to its top five market position across different routes globally and significant scale with $7.3 billion in revenues in 2016, the agency said.

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