Citi advises hedge funds to short CMA CGM bonds
Citi told hedge fund clients to short bonds issued by CMA CGM, warning new ship deliveries and weaker freight rates could pressure the carrier’s credit.
Citigroup is urging hedge funds to short bonds issued by French container carrier CMA CGM, citing an expected increase in global shipping capacity and an anticipated easing of freight rates that may weaken the company’s credit.
Citi’s credit trading and research teams told clients they expect a large order book of container vessels scheduled for delivery later this year to add capacity and put downward pressure on freight rates through late 2026 into 2027. The bank highlighted the timing of those deliveries as a downside risk to earnings and credit metrics across the sector.
CMA CGM’s bonds strengthened in recent months after disruptions to shipping routes and higher freight rates raised sector earnings expectations. A surge in U.S. imports, as some companies accelerated shipments ahead of potential tariffs, also tightened container markets. Some of the company’s notes have traded above par, including a €700 million senior unsecured bond maturing January 2032 and a €600 million issue due January 2031.
The recommendation targets hedge funds pursuing relative-value strategies in credit markets, advising managers to position for longer-term shifts in supply and demand rather than the immediate effects of higher freight rates.
CMA CGM is expected to expand its fleet as new vessels enter service and is forecast to become the world’s second-largest container operator by capacity. Market participants expect the aggregate increase in industry capacity to put downward pressure on freight rates and affect credit performance for several carriers.
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