Grim Future Predicted for Container Freight Giant

FRANCE – WORLDWIDE – Since they were traded in April the latest batch of CMA CGM notes their dollar value has slumped to $0.4725 cents, according to Bloomberg, rendering the French container shipping giant extremely vulnerable. The 8.5% notes were to raise $475 million and analysts predict credit default swap prices mean a 90% chance the third largest box carrier will fail to meet its obligations within five years.

CMA CGM showed well over $5 billion of debt last year and has struggled for some time to refinance, eventually replacing founder Jacques Saade as its head after pressure from shareholders, and, with slumping freight rates, rising fuel costs and potential for overcapacity in the market, things are not looking good.

Recently lambasted by the US government for breaking trade sanctions the group carries debt in excess of three times Ebitda, seemingly unsustainable (Maersk says it has less than one by comparison), yet many analysts still believe CMA CGM will prove a good punt in an uncertain market. Only time will tell but unless the situation improves we may see the company which started in 1978 with just five employees and became a flagship for the French ocean shipping trade, have to sail some very choppy waters.