Fitch Ratings News

The blockage of the Suez Canal is likely to lead to large reinsurance claims, adding to upward pressure on marine reinsurance rates, James Vickers, chair of reinsurance broker Willis Re International, told Reuters.Formal investigations began this week into how the giant container ship Ever Given ran aground in the canal, shutting down shipping in the major global waterway for almost a week.The incident and its impact on hundreds of ships delayed in the canal would be a “large loss” for insurance market Lloyd’s of London…

The blockage of the Suez Canal for nearly a week will result in a “large loss” for Lloyd’s of London, its chairman said on Wednesday, as the insurance market recorded a 900 million pound ($1.2 billion) pretax loss in 2020 due to the COVID-19 pandemic.The Canal is working to clear the backlog after the refloating this week of a stranded giant container ship. The blockage threw global supply chains into disarray.Bruce Carnegie-Brown told Reuters it was too early to estimate the exact loss…

The blocking of the Suez Canal by one of the world’s largest container ships is likely to result in losses worth hundreds of millions of euros for the reinsurance industry, Fitch Ratings said, even as rescue teams were successful in partially refloating the vessel on Monday.The 400-metre (430-yard) long Ever Given got wedged diagonally across the canal in high winds early last Tuesday, blocking the path for hundreds of vessels waiting to transit the shortest shipping route between…

For the fourth consecutive year, Fitch Ratings has affirmed the Panama Canal's 'A' investment grade rating with a stable outlook for its long-term issuer default rating and its senior unsecured notes.The credit rating agency noted that the Panama Canal is "an underlying asset that is critical not only for Panama, but for international commerce, as demonstrated by its stable volume performance, solid competitive position, and well-diversified cargo mix," causing the Panama Canal volume profile to exhibit high levels of resilience.In addition, Fitch Ratings distinguished the Canal as a key player in global trade with a privileged geographical…

Revenue stability and capex plans are the main drivers of credit rating differences among Asia-Pacific ports, according to a new Fitch Ratings report. Leverage and debt structure also set apart the ratings.Revenue stability, due to strong volume or price attributes, and resilience is underpinned by each port's importance to the economy and the strength of its catchment area, along with its competitive position.Volume stability benefits from diverse throughput and limited customer concentration; reliance on a single commodity can increase volatility. Fitch assesses the price attributes as mid-range or stronger for the Asia-Pacific ports.

The exposure of five Philippine banks to financially distressed Hanjin Heavy Industries and Construction Co. Philippines (HHIC-Phil), which recently declared bankruptcy after it defaulted on over $400 million in loans, could put pressure on their credit ratings.Their exposure to what may well be the largest corporate default in Philippine banking history may put pressure on the credit ratings of local lenders, Fitch Ratings said.According to reports, Hanjin owes $412 million to Philippine banks. Another $900 million is owed to Korean banks. So far, little is known about these debts and how the actual value of the assets of the company relate to its capacity to repay.“Local banks’ loans to HHIC-Phil are equivalent to only around 0.2 percent of system loans…

Moody's Investors Service reaffirmed the Panama Canal Authority's (ACP) A2 long-term rating with a stable outlook, based on its distinctive position as an infrastructure asset with a unique geographic advantage and business model, and its strong historical operational and financial performance.According to Moody's, the ACP's strong financial performance has resulted in better than anticipated financial metrics, driven by the successful operations of the Expanded Panama Canal. The credit rating agency noted the Canal's strong operating track record and robust growth after the Expansion.Factoring into its decision, Moody's cited "the Canal's…

The global shipping sector outlook remains negative reflecting the demand-side risks of protectionism and slower economic growth, Fitch Ratings says. Higher fuel costs and sulphur regulation will also put pressure on shippers.Partly offsetting an unfavourable environment are emerging signs of better capacity management by shipping companies, which is key to a sustainable balance and freight rates that support consistent profitability. We expect better fundamentals in container and dry bulk…

More stringent fuel regulations regarding sulphur content could significantly increase global shipping companies' operating costs and capex needs, says Fitch Ratings in a new report."This may negatively affect their credit quality unless they manage to pass these costs to customers. Many shipping companies have started implementing fuel surcharges to recover costs associated with the new sulphur cap regulation, but their ability to sustain these will depend on market fundamentals, which remain challenging," said Flitch.Competitive dynamics may change in the longer term with companies that are less financially able to absorb additional costs, especially given higher oil prices, withdrawing from the market.

Several ships carrying cargoes of sorghum from the United States to China have changed course since Beijing slapped hefty anti-dumping deposits on U.S. imports of the grain, trade sources and a Reuters analysis of export and shipping data showed.Sorghum is a niche animal feed and a tiny slice of the billions of dollars in exports at stake in the trade dispute between the world's two largest economies, which threatens to disrupt the flow of everything from steel to electronics.The supply-chain pain felt by sorghum suppliers on the Pacific, Atlantic and Indian oceans underscores how quickly the mounting trade tensions between the U.S.

Fitch Ratings-London-01 March 2018: Sustaining last year's improved profitability in 2018 may prove challenging for container shipping companies, Fitch Ratings says. The fact that some companies are likely to have remained loss-making in 2017 highlights the ongoing weakness in sector fundamentals due to persistent overcapacity, which may undermine a longer-lasting recovery. Financial reports or preliminary results released so far indicate that container shipping companies had stronger performance in 2017 than 2016. We expect most carriers to have boosted profitability, although performance varies company by company. Maersk Line generated EBIT of USD634 million in 2017 compared to a loss of USD421 million in 2016…

U.S. ports are positioned for another solid year of growth, though the Trump administration's evolving stance on both domestic and international trade is a long-term development worth a close watch, according to Fitch Ratings in its latest sector briefing. This after a strong 2017 in which ports on both coasts saw overall growth through the year. "Moving to larger ships and implementing operational alliances have helped drive volume growth on both coasts in 2017," said Emma Griffith, Director.

MOL Plc. has been upgraded to BBB- investment grade long-term credit and issuer rating with stable outlook by Standard and Poor’s (S&P). S&P concluded that the upgrade to investment grade credit rating was justified by the improvement in MOL’s current and forecasted credit metrics, thanks to the company’s strong performance and supportive industry conditions. S&P added that MOL demonstrated the benefits of its integrated business model, delivered on its cost optimization program with sustainable benefits for profitability and increased the share of less volatile retail and petrochemicals segments. The stable outlook reflects S&P’s expectation that MOL will maintain robust credit metrics…

Traffic growth in the ports sector is likely to remain well below historical levels for the foreseeable future, due to fundamental structural changes in the industry and global trade, Fitch Ratings says. A move towards protectionism would represent a significant additional risk, with the potential to reverse sector growth. Global port traffic growth has slowed in recent years due to a mix of mostly structural factors, including a maturing container shipping industry, the growth of China's internal market and shifting global supply chains. Together, we expect these factors to result in sector growth that is much closer to global GDP growth, compared to the two decades before the financial crisis, when the growth rate in container throughput was a multiple of GDP.

Fitch Ratings' Report: What Investors Want to Know: Container Shipping. Container shipping companies have benefited from a modest increase in freight rates since the start of the year, but a sustainable recovery in the container market will only be achieved by reaching a viable supply/demand balance through capacity cuts, Fitch Ratings says. Container transport volumes outstripped capacity growth in 2016 for the first time since 2010-2011, helped by a higher rate of vessel scrapping and delayed deliveries. We expect this to be only a temporary reversal, as net capacity growth will accelerate in 2017 and 2018, exceeding demand growth and contributing to increased overcapacity.

Today, Moody's credit rating agency announced that it has assigned an A2 rating to the Panama Canal Authority (ACP) for its business model, unique geographic advantage, and historically strong operational and financial performance. Moody's expects this performance to continue into the future, supported by the robust institutional framework and corporate governance under which the ACP operates. In its report, the credit rating agency highlighted that one of the ACP's largest financial strengths is its “clear legal and institutional framework,” which supports a reliable and stable operating environment for the entity moving forward. They also noted that the ACP's assigned rating is just above Panama’s country ceiling of A3…

Hanjin Shipping's and Outer Harbor Terminal's (OHT) bankruptcies this year have raised questions about the legal separation of joint venture terminal operators that are often lease counterparties for U.S. ports, Fitch Ratings says. These events highlight potential risks that must be balanced against the benefits of ports signing lease or concession agreements. Global carrier Hanjin's bankruptcy has exposed the possibility that terminal operating companies, which are often structured as joint ventures (JVs) between shipping counterparties or private equity firms…

The decision by A.P. Moeller-Maersk A/S to split into two separate divisions - Transport & Logistics and Energy - reflects the challenging fundamentals in the sectors in which it operates, and diminishing counter-cyclical benefits of operating in them in the current economic cycle, Fitch Ratings says. We do not expect the split to significantly improve the performance of the group's separate units, although the increased focus may help long-term strategy execution. We believe operational diversification does not consistently provide material benefit to Moeller-Maersk's business profile because the industries in which the company operates are highly cyclical and volatile.

Adani Ports and Special Economic Zone Limited (APSEZ) today informed the Stock Exchanges that Fitch Ratings, Singapore has affirmed India-based APSEZ’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BBB-‘. According to Fitch, the Outlook is Stable. The agency has also affirmed APSEZ’s senior unsecured rating at ‘BBB-‘ and the ‘BBB-“ rating on its USD 650m 3.5% senior unsecured note due 2020. Mr. Karan Adani, Chief Executive Officer of APSEZ said “The rating affirmation is a demonstration of Fitch’s confidence in the management and appreciation of APSEZ’s plans to handle more diversified cargo, especially with a growth in container and coastal volumes.

Fitch Ratings recently upgraded DP World Limited’s  Long-Term Issuer Default Rating (IDR) to BBB from BBB- and its Short-Term IDR to F2 from F3. The rating outlook is stable. The upgrade follows on the Fitch announcement in November 2015 that DP World’s outlook had been revised to Positive from Stable. It reflects the global trade enabler’s strong performance and stable cash flow generation supported by its geographical diversification, high utilisation rate of terminals and the long-term maturity of its main flagship operation in Jebel Ali, Dubai, UAE. Sultan Ahmed Bin Sulayem, Group Chairman and CEO, DP World, said: “We are delighted…

Korean Hanjin Shipping's filing for receivership reflects an unsustainable supply-demand imbalance in container shipping, Fitch Ratings says. "We expect more defaults and M&A activity in the short and medium term but these will only restore equilibrium and boost freight rates if they prompt capacity reduction," says Fitch. Bankruptcies in shipping are not unusual, especially in the current dire industry conditions, but Hanjin is the seventh largest container shipping company in the world and its filing for receivership may therefore have far-reaching ramifications. In particular, creditors' withdrawal of support may indicate a re-assessment of the financing landscape, where secured bank funding for new vessels has remained relatively accessible even as market conditions have deteriorated.

Fitch Ratings has affirmed the following ratings for the Panama Canal Authority (ACP): Long-Term Issuer Default Rating (IDR) at 'A' and $450 million senior unsecured notes at 'A', reflecting the ACP's solid revenue profile and low leverage levels. Fitch Ratings highlighted that the Panama Canal provides unique connectivity and time savings for world maritime trade. In addition, Fitch Ratings stated that the rating outlook is stable, noting the following ratings drivers: the Panama Canal's resilience to economic downturns…

The Port of Angeles has expanded its commitment to sustainability by issuing $35.2 million in green bonds as part of a larger debt refinancing successfully completed this week. The move marks the first time a U.S. port has entered the growing sustainability bond market where investors support projects and companies making positive social and environmental change. “Running a competitive and environmentally responsible port permeates every facet of our operations,’’ said Marla Bleavins, the Port’s Deputy Executive Director and Chief Financial Officer. The green bonds are part of an overall $201.6 million bond issue that will net the Port a record present value savings of $32.5 million, an average of $1.9 million annually through 2040.