Moody's raises Maersk

Moody's Investors Service said it upgraded the long-term issuer rating of A.P. Moller-Maersk A/S to Baa2 from Baa3. Concurrently, the agency changed the outlook to stable from positive.

"Maersk continued to strengthen its operating performance over the recent quarters, supported by efficiency improvement measures and a favorable market environment for container shipping," said Daniel Harlid, Moody’s lead analyst for Maersk, in a press release.

"Positive free cash flow generation and a disciplined financial policy towards debt reduction supported an improvement of credit metrics commensurate with a Baa2 rating, which we expect to be sustained over the cycle", Harlid said.

Maersk employed its positive free cash flow generation during the second half of 2020 to prepay $1.9 billion worth of bank and capital markets debt, cutting its Moody's-adjusted debt/EBITDA ratio of 1.9x, the lowest since 2016, Moody’s said.

The outlook assumes recent improvements of the industry and the current capital structure will be sustained, leading to a Moody's-adjusted debt / EBITDA of 1.5x - 2.3x and an EBIT margin of 7-10% for the next 12-18 months, the agency said.

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