French Shipping Group Says Chinese Trade Volumes Bouncing Back

(Bloomberg) -- It’s ground zero for the coronavirus but China’s manufacturing and trade is rebounding, says the shipping firm that carries one in every eight containers from Asia to Europe and the U.S.

Chinese production capacity “has shown signs of improvement since the end of February,” France’s CMA CGM, the world’s third-largest container shipping firm, said in an annual earnings report on Friday.

“There has been an upturn in volumes and a major catch-up effect is expected once the health situation stabilizes, as Western countries will be seeking to rebuild their inventories,” the company said. “The Group therefore expects to operate a normal capacity fleet as of mid-March.”

CMA CGM conceded that the annual rebound after the Chinese New Year holiday has taken longer than usual in 2020. But the optimistic tone stands in contrast to the carnage sweeping through global financial markets with investors taking fright at the likely economic fallout as the virus extends its grip around the world.

CMA CGM has struggled in recent months with the fallout of trade disputes between the U.S. and China and investors have raised questions about how it will refinance about $1 billion of debt maturing by next year.

The company acquired logistics firm Ceva last year, contributing to a 29% increase in revenue at the cost of almost doubling its debt to $18 billion.

This month it signed a three-year extension to $535 million of credit lines due this year and a cost reduction plan will deliver $1.3 billion in savings during 2020, according to the company’s statement.

The company’s notes due January 2025 are down 5 cents at 62 cents on the euro, the lowest level on record.

In December, a group of hedge funds proposed to provide new money to pay off bonds maturing in 2021 with CMA vessels guaranteeing the debt, but management turned down the offer, people familiar with the matter said at the time.

Read more: Shipping Giant Gets Hedge Fund Loan Offer as Debt Wall Looms

To contact the reporter on this story: Antonio Vanuzzo in London at avanuzzo@bloomberg.net

To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Chris Vellacott

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