Research: Rating Action: Moody’s Changes Outlook on Hapag-Lloyd AG to Positive; Ba2 ratings confirmed

Stockholm, June 22, 2022 — Moody’s Investors Service (Moody’s) today affirmed the Ba2 family of companies (CFR) rating and the Ba2-PD probability of default (PDR) rating of Hapag-Lloyd AG ( “Hapag-Lloyd”). The senior unsecured rating has been upgraded from B1 to Ba3. The outlook for all ratings changed from stable to positive.

A complete list of debts can be found at the end of the press release.

“The change in outlook from stable to positive follows continued improvements in profitability and a reduction in financial leverage as well as an increase in unencumbered assets, supported by more favorable sector conditions as well as measures to improved management performance and a more prudent financial policy,” said Daniel Harlid, senior analyst for Hapag-Lloyd. “While we expect freight rates to normalize over the coming quarters, we expect Hapag-Lloyd’s strong balance sheet to provide a good cushion for a weaker market in 2023 and 2024, even taking into account the substantial dividend payouts,” continued Mr. Harlid.

The continued robustness of Hapag-Lloyd’s operational performance and the continued improvement in credit metrics in a more challenging market environment are the main drivers of further positive pressure on ratings.


The Ba2 CFR rating with a positive outlook reflects Hapag-Lloyd’s continued focus on deleveraging, exemplified by the repayment of 818 million euros of debt in the last 12 months ended March 31, 2022. This increased its unencumbered asset ratio to 47% from 29% during the same period. While some of the prepayments were the result of a very strong market environment, the rating action also incorporates Hapag-Lloyd’s commitment to maintaining a conservative financial policy that incorporates a net debt/EBITDA target below 3.0x. For reference, Moody’s adjusted gross and net debt/EBITDA were 0.4x and negative 0.4x (the company had net cash), respectively, as of March 31, 2022.

We note that the next two years (2023-24) could potentially prove to be two challenging years for the industry, as the global fleet is poised to grow at around 8% per year and the macroeconomic environment is likely to weaken. Capacity growth is significantly higher than market projections for demand growth of around 3-4%. Such a gap between supply and demand has always exerted negative pressure on freight rates and carrier profitability. Nonetheless, the Ba2 rating is well positioned to defend against these downside risks, as the current capital structure provides protection against a weaker market environment. The positive outlook indicates that a higher rating is possible if such a weakening environment were less severe than what the industry has experienced in the past. It also assumes that Hapag-Lloyd maintains its prudent financial policy, including a dividend policy in balance with its ability to generate free cash flow, supporting sustained credit metrics consistent with Ba1 rating category requirements.

The upgrade of the senior unsecured bond rating from B1 to Ba3 reflects the improved asset coverage, given the higher proportion of unencumbered assets on Hapag-Lloyd’s balance sheet.


The positive outlook reflects the potential for further positive pressure on ratings, assuming that recent performance improvements in the sector and Hapag-Lloyd’s disciplined actions to improve its capital structure are maintained, leading to a debt/EBITDA adjusted by Moody’s of 1.9x – 2.0x and an EBIT margin of 9-10% for the next 12-18 months.


Hapag-Lloyd’s bond rating is one notch below its CFR, reflecting the contractual subordination to secured debt existing within the group (mainly ship and container finance). The move from B1 to Ba3 reflects: (1) an increased proportion of unencumbered assets; (2) a higher rating level; (3) a reduction in secured debt relative to unsecured debt; and (4) the expectation that the downward trend in the use of secured debt will continue.


We consider Hapag-Lloyd’s liquidity to be good. The company had $12.9 billion in liquidity and had access to $723 million in revolving credit facilities, all of which were undrawn as of March 31, 2022. Given the high volatility typical of container shipping, the covenants of the company include minimum equity and minimum liquidity, but no leverage or hedging ratios. . Hapag-Lloyd has a number of unencumbered vessels and containers which could be pledged to raise additional cash if needed. Although maintenance investment needs are limited, the company has outstanding orders for 17 new vessels with a total capacity of 350,000 TEUs which Moody’s says will be financed with a combination of cash and debt. For the next 12 months (starting June 31 of this year), the company has approximately $560 million in debt coming due.


An upgrade requires sustained improvements in leverage and profitability, reflected by (1) Moody’s debt-to-adjusted EBITDA ratio remaining comfortably below 3.0x, (2) sustained high single-digit EBIT margin in percentage terms and (3) sustainable ROE/Net Debt at least in the twenties in percentage terms. Furthermore, a prerequisite for positive rating pressure is that the company maintains a good liquidity profile at all times.

Negative pressure on ratings could arise if credit metrics weaken in a sustained manner: (1) if the company’s debt/EBITDA exceeds 3.0x for an extended period, (2) the EBIT margin falls below 5% over the cycle and (3) cash retained flow (RCF)/net debt down to around 15%. In addition, negative free cash flow and a weakened liquidity profile would put negative pressure on ratings.


..Issuer: Hapag-Lloyd AG


…. LT family of companies rating, Ba2 confirmed

…. Default rating probability, confirmed Ba2-PD

Updates :

…. Senior Common Unsecured Bond/Debenture, upgrade to Ba3 from B1

Outlook Actions:

….Outlook from stable to positive


The main methodology used in these ratings is Shipping published in June 2021 and available at Otherwise, please see the Scoring Methodologies page on for a copy of this methodology.


Hapag-Lloyd AG, headquartered in Hamburg, Germany, is the world’s fifth largest container carrier by volume market share. As of March 31, 2022, it operated a fleet of 248 vessels, including 116 owned and 132 chartered. For the last twelve months that ended on March 31 this year, the company recorded a turnover of 26.2 billion euros and an EBIT of 12.4 billion euros. Hapag-Lloyd was formed in 1970 from the merger of Hapag (1847) and North German Lloyd (1857).


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Daniel Harlid
Vice President – Senior Analyst
Corporate Finance Group
Moody’s Investors Service (Nordics) AB
Norrlandsgatan 20
Stockholm, 111 43
JOURNALISTS: 44 20 7772 5456
Customer service: 44 20 7772 5454

Christian Hendker, CFA
Associate General Manager
Corporate Finance Group
JOURNALISTS: 44 20 7772 5456
Customer service: 44 20 7772 5454

Release Office:
Moody’s Investors Service (Nordics) AB
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