Denmark-based shipping and oil company A.P. Møller-Mærsk’s Baa1 issuer rating, Baa1 senior unsecured rating and the (P)Baa1 medium-term note (MTN) program rating were placed on review for downgrade, according to Moody’s rating agency.
This follows the company’s announcement that it will become an integrated transportation and logistics company while separating the oil and oil related activities over the next 24 months.
“We have placed the ratings of Maersk on review for downgrade because we believe that its business diversification will reduce significantly with the separation of its energy businesses which represented 62% of EBITDA as of the first half of 2016,” Maria Maslovsky, a Moody’s Vice President-Senior Analyst and lead analyst for Maersk, said.
The rating agency added that the review would likely result in a downgrade of at least one notch, although ultimately the rating will depend on the amount of debt that will be allocated to the integrated transport and logistics company, as well as any remaining ownership interests in the energy businesses.
Moody’s said that the review will primarily focus on the actions that Maersk intends to take in order to unlock value and create synergies within the newly established transportation and logistics division, the execution risk and timing related to the separation of the energy businesses, as well as the expected impact on financial metrics.
The review, expected to be finalized by the end of December 2016, will also focus on the company’s future financial policy which includes defined key financial ratio targets in line with an investment grade rating.
On September 22, Maersk said that its Transport & Logistics division will consist of Maersk Line, APM Terminals, Damco, Svitzer and Maersk Container Industry, based on a one company structure with multiple brands. The Energy division will consist of Maersk Oil, Maersk Drilling, Maersk Supply Service and Maersk Tankers.