S&P Maalot upgrades Zim's rating by four levels to BB+

The Rating agency cited improved liquidityand a more favourable shipping environment. Zim CFO: “The financial arrangement we reached last year is proving itself successful”
 
Rating agency Standard & Poor's Maalot Lt. Israel's leading provider of independent credit ratings has raised the rating of wholly-owned Israel Corp. subsidiary Zim Integrated Shipping Service Ltd. by four levels to BB+, from "B", citing improved liquidityand a more favourable shipping environment.
 
In a statement issued earlier this week by the rating provider it noted that the higher ranking follows the ocean carrier's return to profitability in the second quarter of 2010. The Israeli unit of S&P also upgraded its outlook for Zim to "positive" from "stable".
 
S&P Maalot said, "Zim's operational performance is better than expected and is above the forecast presented to us as part of the business plan that accompanied the debt arrangement agreed in December 2009. The positive change in the business environment, which began in the first half of 2010, was reflected in a rise in transportation fees and the scale of activities, and before a significant improvement in Zim's short term liquidity picture. The company's level of leveraging remains very high, but there is no fear of a failure to repay in the short term”.
 
Zim recently published its financial report for the second quarter of 2010 showing an operating profit (EBITDA) of $87 million, and positive cash flowfrom current activities of $94 million.
 
Revenue was $933 million, 72% up from the corresponding quarter of 2009. Zim Chief Finance Officer Allon Raveh said in a press release that "The rating upgrade is a clear indication that [the] financial arrangement we reached last year is proving itself successful".
 
Raveh added that "Looking ahead, there is still a degree of uncertainty in the global markets," "However, we have completed the first half of 2010 according to our business plan, and enjoy full backingfrom the banking system. I believe these are the reasons which led S&P to such a sharp increase in our rating."
 
Zim recently took delivery of the last two mega container ships out of a series of eight planned for delivery in 2009-10 that were financed by a consortium of international banks.