Credit rating agency Moody’s has upgraded DP World’s forecast and said that the company’s outlook is “stable” thanks to its diversified global operations and solid liquidity, despite the potential impact of the US-China trade war.
Moody’s based its decision on an expected increase in container traffic and the fact that DP World focuses primarily on origin and destination ports, which are less vulnerable to cyclical downturns than transhipment ports.
Moody’s saw an escalation in the US-China trade war creating “significant uncertainty” for the container shipping industry at large, but found that DP World’s direct exposure in the Far East will be “limited” as it operates two ports in the region.
The upgrade, which is from Baa2 to Baa1, is an improvement in Moody’s rankings of moderate credit risk, and moves the Dubai-based terminal operator closer to the next notch up of A3, which is low credit risk.
DP World’s evaluation comes after an increase of 6% in its 2018 first half volume on 24 July, with every region in which it operates enjoying growth.
The London Court of International Arbitration (LCIA) also ruled in its favour over the disputed Doraleh Container Terminal.
It also announced the acquisition of Europe’s largest container feeder and shortsea network Unifeeder for approximately USD $764 million acquisition on August 7, 2018.
Rehan Akbar, an analyst at Moody’s, commented on the upgrade: “Our decision to upgrade DP World's ratings reflects a strong track record in managing its business through industry cycles as well as achieving its growth ambitions, while maintaining a healthy financial profile.
“DP World's growing scale and geographic footprint has increased its business resilience which Moody's now sees as more appropriately reflected in the Baa1 rating.”