zoomImage Courtesy: Navios Maritime

Moody’s rating agency has affirmed the Caa3 corporate family rating of Greek shipping firm Navios Maritime Holdings and changed the outlook for all ratings to positive from negative.

The rating agency affirmed the company’s probability of default rating of Caa3-PD, as well as the Caa2 rating on Navios Holdings’ USD 650 million senior secured first preferred ship mortgage notes and the Ca rating on its USD 350 million senior unsecured notes.

“This rating action reflects improvements in the dry bulk market where a large portion of Navios Holdings’ fleet operates, as well as the resolution of its dispute with Vale regarding a 20-year contract with Navios Logistics, a majority-owned South American subsidiary,” Maria Maslovsky, Vice President-Senior Analyst at Moody’s and the lead analyst for Navios, said.

“The market improvements and the contract affirmation lead us to expect a neutral to positive free cash flow in the next twelve to 24 months and improved liquidity,” Maslovsky added.

The rating action to revise the outlook to positive reflects the strengthening in the dry bulk market as compared to the conditions a year ago, although still modest by historical standards. The Baltic Dry Index (BDI) has reached 1,400 in March, almost five times the multi-year low of 290 it posted in February 2016.

Accordingly, the time charter rates as cited by Drewry Maritime Research have improved, with time charter rates for Capesizes reaching USD 15,400/day in March 2017 from USD 5,300/day in March 2016.

Time charter rates are “a key underpinning of Navios Holdings’ dry bulk business, and we expect the company’s performance in 2017 to improve such that it generates neutral to positive free cash flow following negative USD 114 million free cash flow in 2016,” Moody’s said.