CMA CGM secures $1.1 b state-backed loan

Monday, 18 May 2020 00:00 -     - {{hitsCtrl.values.hits}}

CMA CGM has secured a $1.1 billion state-backed loan to help the French carrier ride out the COVID-19 storm.

The French state will guarantee 70% of the syndicated loan provided by a consortium of three banks — BNP Paribas, HSBC, and Société Générale — which will have an initial one-year maturity and extension option for up to five years.

The loan is part of a state-guaranteed loan scheme that was established at the end of March in response to the COVID-19 pandemic.

CMA CGM said that this new funding further strengthens its “cash position in order to confront uncertainties in the global economy resulting from the health crisis and lockdown measures in a large number of countries”.

Container shipping is expected to see volumes fall by as much as 10% in the first half of 2020 compared with the same period last year. 

Although all carriers will understandably feel the bite, CMA CGM has been singled out as one of the operators likely to come under the most pressure due to its high debt level, which is approaching $ 18 billion. 

Although the French group has looked to remedy this in part following the $ 1 billion disposal of port assets, plus sale-and-leaseback transactions, it is still regarded as vulnerable. Credit agency Moody’s also recently put the group’s credit rating under review for a downgrade.  

Chief Executive Rodolphe Saadé said the additional funding shows the confidence banking partners have in the CMA CGM group’s business model and strategy.