Supply-Chain Bottlenecks are Boosting Shipping Firms’ Bonds
2021-05-05 11:17:20.57 GMT

By Irene García Pérez
(Bloomberg) — Supply chain bottlenecks are driving down
the potential cost of any future debt issuance for Europe’s
major shipping companies, just as they risk pushing up consumer
prices globally.
Notes of CMA CGM, Hapag-Lloyd and AP Moller Maersk have
bounced back strongly since the middle of last year on the back
of a rise in manufacturing activity and a surge in online
shopping from house-bound consumers. If sustained, this trend
would likely lower the cost of any new debt issued by the
companies.
In March, the credit ratings of all three were upgraded —
Maersk within investment grade, and CMA CGM and Hapag-Lloyd in
high yield — due, among other things, to a favorable market for
container shipping.
While Hapag-Lloyd and CMA CGM have taken the chance to
refinance their debt, Maersk announced on Wednesday that it
plans to buy back up to 31 billion kroner ($5 billion) of its
own shares as it generates excess cash amid “exceptional” demand
for shipping services.
“Every ship that is available is sailing these days,” said
Rolf Habben Jansen, chief executive officer at Hapag-Lloyd, in a
Bloomberg TV interview on Apr. 9. He also said that he expects
the situation to normalize in the third quarter.
At the beginning of last year, “CMA CGM was seen as a
company with a liquidity problem and no one expected it to
experience the rebound it has recorded,” said Benjamin Sabahi,
head of credit research at Spread Research, in a phone
interview. “The company has been benefiting from a surge in
trade from manufacturers, but we will see if the higher shipping
tariffs will last long,” he said. A spokesperson for CMA CGM
didn’t immediately reply to a request for comment.
“As lockdowns are lifted and consumers rebalance their
spending towards services, some easing of the current supply
bottlenecks should be expected, with knock-on effects on
shipping costs,” European Central Bank economists Maria Grazia
Attinasi, Alina Bobasu and Rinalds Gerinovics wrote in a
bulletin published May 3.
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Hike
The surge in demand and transportation bottlenecks has
driven commodity prices to their highest since 2011. With an
increase in the cost of raw materials and intermediate goods, as
well as logistics, some consumer-facing companies have warned in
recent days that they may raise prices, adding to inflation
risks that could prompt central bank action.