23 September 2009

Chile’s Vapores Climbs Most in Five Weeks as S&P Removes CreditWatch

By Nathan Gill
Sept. 23 (Bloomberg) -- Cia. Sudamericana de Vapores SA, Latin America’s largest container ship operator, rose the most in five weeks in Santiago trading after Standard & Poor’s said the company’s financial flexibility has improved.

Valparaiso, Chile-based Vapores climbed 4.6 percent to 430 pesos at 1:42 p.m. New York time, its biggest intraday gain since Aug. 14. The shares have increased 3.6 percent this year, trailing a 40 percent rally in the benchmark Ipsa index.

S&P’s affirmed the company’s B- credit rating yesterday and removed it from CreditWatch, citing increased liquidity and “successful” negotiations with shipyards, according to a statement on the rating company’s newswire.

“The rating action reflects our views on the company’s recent actions, which we believe have strengthened the company’s financial flexibility and liquidity position, and have alleviated some of the pressure that depressed market conditions have put on the container ship industry,” wrote Diego Ocampo, a Buenos Aires-based S&P analyst.

The company benefited from a reduction in its leasing payments and the sale of stock in the second quarter, which helped it build cash reserves, Ocampo wrote.

Vapores is “well positioned” to increase shipments of iron into China when that country’s economy rebounds, Gabriela Clivio, the head of research at Itau Chile Corredor de Bolsa, said today in a telephone interview from Santiago. She predicts shares will rise to 450 pesos by the end of the year.

“Vapores has a great advantage because it has a large number of ships and they hardly need to invest to increase their fleet,” Clivio said. “To transport iron you need big capacity and Vapores has this capacity.”