CMA CGM - Moody’s B1/Pos and How To Spend It
All,
The Moody’s upgrade should support the transition of CMA CGM towards a normal (ie low yield) high yield company. YTWs in the new bonds have already come down to 4% from the 5% levels of just a few weeks ago.
Moody’s is understandably more cautious on CMA CGM than S&P, which recently moved the company past the crucial B+/BB- line, the new IG/HY line. The concerns revolve around what CMA CGM will do with the extra cash windfall from the favorable rates environment.
We agree, as the company has proven to be very acquisitive in past periods of relatively benign trading environments (think CEVA).
Juliano
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