Navios Maritime Holdings Inc. (NM)

[dabonenose]

In-case anyone has been following NM's credit ratings,,,they have been improving as of late Friday(5/26), as Moody's has bumped them up.

https://www.moodys.com/research/Moodys-revises-Navios-Logistics-outlook-to-stable--PR_367157?WT.mc_id=AM~WWFob29fRmluYW5jZV9TQl9SYXRpbmcgTmV3c19BbGxfRW5n~20170526_PR_367157&yptr=yahoo


Also, this morning (Monday,5/29) S&P has improved their rating on NM.

https://invest.ameritrade.com/grid/p/site#r=jPage/https://research.ameritrade.com/grid/wwws/research/stocks/news/article?c_name=invest_VENDOR&docKey=1-DN20170529001172-6CVS2OIG3NHILHRQQVURGTMP4V

Press Release: S&PGR Revises Navios Maritime Holdings Outlook To Stable

7:17 am ET May 29, 2017 (Dow Jones) Print
The following is a press release from Standard & Poor's:

-- The Marshall Islands-registered shipping company Navios Maritime

Holdings' liquidity position has improved, mainly thanks to the recovery of

drybulk shipping rates.

-- Furthermore, the arbitration tribunal ruling in favor of Navios

Logistics (a subsidiary of Navios Maritime Holdings) concerning its major

contract with Vale S.A. removed the cash flow uncertainty in the logistics

operations.

-- We are revising our outlook on Navios Maritime Holdings to stable from

negative, and affirming the rating on the company at 'B-'.

-- The stable outlook reflects our view that Navios Maritime Holdings'

free cash flow generation will at least break even this year and its liquidity

position will stabilize in the next 12 months, thanks to gradually improving

drybulk charter rates, EBITDA expansion of Navios Logistics, and the company's

competitive and predictable cost structure.

LONDON (S&P Global Ratings) May 29, 2017--S&P Global Ratings said today that

it had revised its outlook on Marshall Islands-registered shipping company

Navios Maritime Holdings Inc. (Navios Holdings) to stable from negative. At

the same time we affirmed the issuer credit rating at 'B-'.

We also affirmed our 'B-' issue rating on the company's senior secured debt.

The recovery rating is unchanged at '3', reflecting our expectation of

meaningful (50%-70%) recovery in the case of a payment default (rounded

estimate: 65%).

We also affirmed our 'CCC' issue rating on the company's senior unsecured

debt. The recovery rating is unchanged at '6', reflecting our expectation of

negligible recovery (0%-10%) in the event of a payment default (rounded

estimate: 0%).

The outlook revision reflects Navios Holdings' improved liquidity position,

mainly reflecting drybulk shipping rates that have rebounded from their

historical lows over the past few quarters. For example the one-year time

charter rate for a large Capesize vessel averaged $13,000 per day (/day) in

January-May 2017, up from $7,300/day in 2016, according to Clarkson Research.

This will bolster the company's cash flow generation in the next 12 months.

Furthermore, the arbitration tribunal ruling that the major contract with Vale

S.A. (BBB-/Positive/--) was in full force and effect, in the favor of Navios

South American Logistics Inc.'s ("Navios Logistics", Navios Holdings'

63.8%-owned subsidiary), removed the cash flow uncertainty in the logistics

operations. Under the take-or-pay contract, Navios Logistics will generate a

minimum of $35 million in annual EBITDA for handling 4 million tons of iron

ore via its port terminal in Uruguay for Vale for 20 years (starting in the

third quarter of this year).

Founded in 1954 as a subsidiary of U.S. Steel, Navios Holdings controls a

fleet of 66 drybulk vessels (of which 40 are owned and 26 chartered-in) and

provides transportation and logistics services in South America (Hydrovia

region).

We have revised upward our assessment of Navios Holdings' stand-alone credit

profile to 'b-' from 'ccc+'. This reflects the improved cash flow generation

prospects, mainly because of recovered charter rates in Navios Holdings' core

drybulk shipping business, supported by the narrowing industry

demand-and-supply imbalance, complemented by the company's proactively lowered

cost breakeven rates, working capital optimization and efficiency measures,

and limited capital spending requirements after Navios Logistics completed the

expansion of port terminal in South America. Furthermore, the agreement with

Vale to perform under the contract's terms adds to cash flow predictability.

We anticipate drybulk charter rates to recalibrate to more sustainable (above

their operating breakeven) levels in 2017, based on promising demand dynamics

so far this year for iron ore and coal from Asia (which is by far the largest

global importing region of iron ore and coal) and industry supply-side

adjustments. In our view, the recent notable improvement in charter rates from

the fourth quarter of 2016 (albeit following record lows seen in early 2016)

is vulnerable to uncertain sustainability of commodity imports from China, in

particular. Nevertheless, our expectations of slowing global fleet expansion

in 2017 and 2018, combined with sustained low-single-digit trade growth, will

likely result in an overall improvement in rates this year. We believe that

this trend will continue into 2018 when persistent vessel scrapping, deferral

or cancellation of ships on order, and limited contracting of new tonnage will

likely curtail supply pressure. Against this backdrop, we forecast that Navios

Holdings will achieve a free operating cash flow breakeven this year, which

incorporates the company's continued working capital optimization measures.

This compares with a cash balance of about $141 million on Dec. 31, 2016.

Navios Holdings' business risk profile mainly reflects the company's weak

profitability on the back of below-industry-average return on capital metrics

and relatively high volatility of profitability compared with the broader

transportation industry. We also factor in the shipping industry's high risk,

which stems from the industry's capital intensity, high fragmentation,

frequent imbalances between demand and supply, lack of meaningful supply

discipline, and volatility in charter rates and vessel values.

Positives are Navios Holdings' competitive position, which benefits from its

expanding and more predictable-than-traditional-shipping transportation and

logistics business in South America; its holdings in affiliates, which pay

dividends under normal operating conditions; and its solid reputation as a

quality operator of a relatively young and cost-efficient vessel fleet

underpinned by a good grip on cost efficiencies and control, as reflected in

below the industry-average daily vessel operating costs.

Our assessment of Navios Holdings' financial risk profile incorporates the

company's high adjusted debt, which reflects the underlying industry's high

capital intensity, the company's track record of large expansionary

investments, and a prolonged period of depressed charter rates, and which will

result in average credit measures commensurate with the lower end of our

highly leveraged category in 2017-2018.

We analyze Navios Holdings and the Marshall Islands-registered oil- and oil

product shipping company Navios Acquisition on an integrated basis because of

their linked business relationships. Navios Holdings owns 46.1% of Navios

Acquisitions. In September 2016, Navios Acquisition provided a two-year,

8.75%, $70 million secured revolving credit facility to Navios Holdings for

general corporate purposes. Crude tanker owner and operator Navios Maritime

Midstream Partners L.P. (Navios Midstream), 59%-owned unconsolidated affiliate

of Navios Acquisition, also falls under the group credit profile (GCP) because

of the entities' material business interactions, as signified by Navios

Acquisition's extension of a de facto rate guarantee for Navios Midstream's

vessels. We determine the GCP of 'b' as the weighted average of the

creditworthiness of the group members Navios Holdings, Navios Acquisition, and

Navios Midstream.

The stable outlook reflects our view that Navios Holdings' free cash flow

generation will be at least break even this year and its liquidity position

will stabilize for the next 12 months, thanks to gradually improving drybulk

charter rates, increased EBITDA at Navios Logistics, and Navios Holdings'

competitive and predictable cost structure. We furthermore incorporate our

view that the GCP will remain unchanged.

We could downgrade Navios Holdings if its efforts to stabilize its liquidity

are ineffective and if we consider its liquidity sources-to-uses ratio will

fall below 1.0x, constituting a likely default risk within the next 12 months.

In particular, we think this might happen due to an unexpected drop in drybulk

charter rates below our base-case forecast or inability to refinance the

unsecured bond due February 2019 in a timely manner.

Furthermore, an unlikely material deterioration of Navios Acquisition's cash

flow generation and liquidity, resulting in a downward revision of the GCP to

'ccc+', would squeeze Navios Holdings' creditworthiness.

An upgrade could follow if Navios Holdings' free cash flow generation turns

firmly positive, liquidity position stabilizes so that the sources to uses

shortfall is remote, and adjusted FFO to debt strengthens sustainably to above

6.0%. This would be possible in the medium term if drybulk charter rates

perform consistently with our base-case forecast and Navios Holdings gradually

reduces debt. However, we consider debt reduction as unlikely in the next 12

months, given Navios Holdings' confirmed appetite for opportunistic

debt-funded vessel acquisitions.