Hapag-Lloyd AG. Credit update following completion of the UASC merger. CREDIT OPINION 20 July Update. Summary Rating Rationale.

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1 CREDIT OPINION Hapag-Lloyd AG Credit update following completion of the UASC merger Update Summary Rating Rationale RATINGS Hapag-Lloyd AG Domicile Germany Long Term Rating 2 Type LT Corporate Family Ratings Outlook Stable Please see the ratings section at the end of this report for more information. The ratings and outlook shown reflect information as of the publication date. Hapag-Lloyd's 2 corporate family rating reflects (1) the company's strengthened business profile following the merger with UASC including a top five position with a 7.1% market share according to Alphaliner; (2) the flexibility of its fleet, owing to the high number of chartered vessels that could be redelivered in the next 12 months; (3) an adequate liquidity profile supported by de-minimus capex in the next few years owing to UASC's young fleet with a number of large ships; (4) the support the company receives from its shareholders; (5) elevated leverage (6.7x debt/eitda including Moody's standard adjustments) following the merger with UASC and the assumption of UASC's debt; (6) commoditized and competitive nature of the container shipping industry with limited revenue visibility due to prevalence of short-term contracts and spot trading. Credit Strengths Top five market position in the global container shipping industry Strengthened business profile owing to UASC merger and expected synergies Contacts Strong group of committed majority shareholders with a solid track record of support Maria Maslovsky VP-Senior Analyst maria.maslovsky@moodys.com Credit Challenges Egor Nikishin Associate Analyst egor.nikishin@moodys.com Mario Santangelo Associate Managing Director mario.santangelo@moodys.com Container shipping freight rates remain volatile Elevated leverage following UASC merger completion Execution risk with respect to delivering on anticipated synergies of at least 435 million although supported by good track record of integrating CSAV Rating Outlook The stable outlook mainly reflects Moody s expectations of increased leverage immediately following the UASC transaction combined with volatile freight rate environment. While we believe the volatility in freight rates will continue, we expect a measure of improvement going forward. Factors that Could Lead to an Upgrade Positive rating pressure could arise if Hapag-Lloyd were to demonstrate (1) a reduction in Moody s-adjusted debt-to-eitda below 5x on a sustainable basis; and (2) an increase in its (funds from operations (FFO) + interest expense)/interest expense above 3x on a sustainable basis.

2 Factors that Could Lead to a Downgrade Negative rating pressure could arise if Hapag-Lloyd's leverage increases above 6x for a prolonged period of time or (FFO + interest expense)/interest expense declines below 2x. A rating downgrade could follow if the business environment deteriorates, if the company does not proceed with the planned $400 million rights offering, or if there is any pressure on Hapag-Lloyd's liquidity profile. Key Indicators Exhibit 1 3/31/2017 (LTM) 12/31/ /31/ /31/2014 Revenues (USD illion) $8.8 $8.6 $9.8 $9.0 12/31/2013 $8.7 Size of Fleet EIT Margin 3.2% 3.3% 5.6% -4.2% 1.4% ROA (NPATUI / Total Assets) -1.0% -0.8% 0.6% -5.8% -1.6% Debt / EITDA 4.8x 4.9x 4.1x 9.4x 5.5x RCF / Net Debt 14.6% 14.5% 16.4% 8.3% 14.3% 3.3x 3.4x 3.4x 2.3x 3.2x (FFO + Interest) / Interest Expense All ratios reflect Hapag-Lloyd only, are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations. Source: Moody's Financial Metrics Detailed Rating Considerations TOP FIVE MARKET POSITION AND STRENGTHENED USINESS PROFILE With the addition of UASC's container shipping activities, Hapag-Lloyd has become the fifth-largest global operator in terms of capacity worldwide. According to Alphaliner, it has a 7.1% share of the container shipping market behind Maersk Line (owned by A/P Moller-Maerks, aa2 negative, 19.4% including Hamburg Sud), Mediterranean Shipping Company (unrated), COSCO (unrated, 11.5% including OOCL) and CMA CGM (1 stable, 11.3%). UASC adds a younger and larger fleet, which will reduce the average fleet age of the combined entity to around 7.2 years, compared with 8.5 years for Hapag-Lloyd pre-combination (as of March 2017). In addition, the combined entity will benefit from an average vessel size of over 6,839 TEU, compared to 5,858 TEU for the top 20 companies in the industry and 3,878 TEU for world fleet, according to the company s estimates. Larger and more modern ships are more cost efficient in operation and will favourably position the combined firm. Exhibit 2 Global container shipping companies 4, % 4,000 3, % TEU '000 3, % 2, % 2, % 1,500 1, Maersk + Hamburg Sud* MSC COSCO + CSCL + OOCL* CMA CGM + NOL Hapag-Lloyd + UASC Source: Alphaliner, company's presentations This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on for the most updated credit rating action information and rating history. 2

3 Moreover, Hapag-Lloyd's business profile is sustained by a balanced geographical presence. With UASC, Hapag-Lloyd strengthens its service offer, especially in the Far East and Middle East, but also in Transatlantic and Transpacific trades. STRONG GROUP OF COMMITTED MAJORITY SHAREHOLDERS WITH A SOLID TRACK RECORD OF SUPPORT Following the merger with UASC, Hapap-Lloyd's key shareholders comprise historical shareholders CSAV Germany Container Holding GmbH ( CG Hold Co ) (22.6%), HGV Hamburger Gesellschaft für Vermögens- und eteiligungsmanagement mbh ( HGV ) (14.9%) and Kühne Maritime GmbH and Kühne Holding AG (together, Kühne ) (17.6%), as well as new key shareholders Qatar Investment Authority though its subsidiary Qatar Holding LLC ( Qatar Holding ) (14.4%) and The Public Investment Fund of the Kingdom of Saudi Arabia ( PIF ) (10.1%). Shortly following the merger Kühne increased its stake in Hapag-Lloyd to 17.6% from 14.6%, while TUI AG (a2 stable), a legacy shareholder, exited its stake in Hapag-Lloyd as previously indicated. As part of the merger agreement, the key shareholders agreed to backstop Hapag-Lloyd's $400 million capital increase to be executed within six months of the closing. We view this as a positive for the Hapag-Lloyd's credit profile strengthening the company's capital base and liquidity while re-affirming the commitment of its equity owners. Historically, Hapag-Lloyd has benefitted from having a pool of long-term shareholders that have supported the group in difficult times and for strategic transactions. During the 2009 financial crisis, Hapag-Lloyd's shareholders injected a large amount of equity (approximately EUR2.2 billion). In addition, the acquisition of CSAV's container liner activities was conservatively financed and entailed a EUR370 million capital increase, with contribution from CSAV's shareholders (70%) and from Hapag-Lloyd's shareholders (30%), which benefitted the combined group's financial profile. In 2015, Hapag-Lloyd completed an initial public offering and raised approximately EUR265 million. Simultaneously with the initial public offering, two existing shareholders (Kuehne and CSAV) increased their stakes in the company, demonstrating again the shareholders' long-term support. CONTAINER SHIPPING INDUSTRY REMAINS VOLATILE AND HIGHLY COMPETITIVE The container shipping industry continues to be characterised by strong competition and imbalance between supply and demand owing to necessarily chunky capacity additions and limited revenue visibility resulting from short-term (or even spot) contracts. Sill, following the cyclical trough in the second quarter of 2016, industry participants reduced ordering, increased scrapping and postponed new vessel deliveries resulting in supply reductions. In May 2017, we revised our outlook for the global shipping industry to stable from negative in part driven by our stable view on the container shipping sector changed from negative previously. Exhibit 3 Expected Increases in Shipping Supply and Demand Growth Through December Containers (TEU) Fleet as of 31 December 2016 (million) 19,919 Supply growth in 2017 (million)* About 600 Expected supply growth 2.5 to 3.5% Expected demand growth 1.5 to 2.5% Supply growth vs. demand growth 1.0% Segment views Stable Twenty-foot equivalent unit (TEU) is the standard measure of a container ship's capacity. * New buildings less postponements, cancellations and scrapping. Source: Drewry, Moody's Freight rates have been very volatile over the past years and have experienced a multi-year low in They have recovered somewhat since the trough but remain below historical levels as demonstrated by the CCFI index. 3

4 Exhibit 4 China Containerised Freight Index (CCFI) Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Source: FactSet ELEVATED LEVERAGE FOLLOWING UASC MERGER COMPLETION; STAILISATION ANTICIPATED LONGER TERM Pro forma for the merger, Hapag-Lloyd's gross debt-to-eitda was approximately 5.7x for the twelve months ended 31 March 2017 as compared to 4.3x for the same prior-year period including Moody's standard adjustments. Moody s-adjusted debt stood at 10.9 billion including 7.7 billion of reported debt, capitalised leases (3x multiple) of 3.0 billion and defined benefit pension obligations of $245 million. Moody s-adjusted EITDA was 1.9 billion, including lease adjustment of 1.0 billion. As the combined entity realises the synergies from the transaction, we anticipate that leverage will decline also supported by a mild improvement in freight rates. Positively, the acquisition of UASC s fleet will cover Hapag-Lloyd s needs for new vessels for the next years. Hence, Hapag-Lloyd s plan is to stop buying new ships from 2018 onward, which will significantly reduce the company s capex to around $0.4 billion in 2018, from more than $1 billion in 2016, improve free cash flow generation and allow the company to deleverage in the medium term. EXECUTION RISK WITH RESPECT TO DELIVERING ON ANTICIPATED SYNERGIES ALTHOUGH OFFSET Y GOOD TRACK RECORD OF PRIOR M&A INTEGRATION In light of the large scale of UASC's container shipping activities, we expect some integration risk. However, this is partially mitigated by Hapag-Lloyd s experience in business combinations, as highlighted by the recent and successful example of acquiring CSAV. In that transaction, Hapag-Lloyd realised synergies of $400 million, up from its initial target of $300 million. We expect that the integration model applied to this combination will be used with UASC. With respect to UASC, Hapag-Lloyd estimates that synergies of $435 million could be achieved by 2019, coming mostly from the network and fleet optimisation, and to lesser extent from lower overheads, driven by consolidated headquarters and other cost savings. The company plans for a significant portion of the total synergies to be realised in the course of Liquidity Analysis We expect Hapag-Lloyd s liquidity to be adequate following the merger with UASC. The combined entity had 1.1 billion of cash and $350 million of revolving credit facility availability as of 31 March Given the high volatility typical for container shipping, the company s covenants include minimum equity and minimum liquidity, but no leverage or coverage ratios. Hapag-Lloyd has a number of unencumbered vessels valued at over $600 million that could be pledged to raise additional liquidity. Also, Hapag-Lloyd s headquarters building in Hamburg could be refinanced, yielding additional proceeds. eyond these resources available to the merged entity, a $400 million rights offering backstopped by key shareholders will provide an additional liquidity cushion. It is expected to be completed by the end of Hapag-Lloyd managed to extend its bond maturity profile from to 2022 with the new 450 million notes issued in Q1 this year as well as 450 million issued in the beginning of July. However, the company also has ongoing and significant debt amortisation on the vessels financing facilities; we estimate that Hapag-Lloyd will have to repay approximately 0.3 billion of debts in the rest of 2017, 0.5 billion in 2018 and 0.4 billion in

5 Structural Considerations Hapag-Lloyd's bond rating is two notches below its corporate family rating reflecting contractual subordination to the secured debt existing within the group (primarily vessel and container financing), as well as pari passu ranking with all other unsecured indebtedness issued by Hapag-Lloyd. Profile Hapag-Lloyd AG is the largest container liner shipping company in Germany and one of the largest worldwide, based on global market coverage. As of 31 March 2017, it operated a fleet comprising 172 ships, including 74 owned, 95 chartered-in and three leased vessels. The company reported 7.9 billion in revenue in the last 12 months to March Hapag-Lloyd was established in 1970 as a result of the merger of Hapag (1847) and North German Lloyd (1857). On 2 December 2014, Hapag-Lloyd merged with the Chilean shipping company Compania Sud Americana de Vapores (CSAV). On 24 May 2017 completed a business combination with United Arab Shipping Company (UASC), whereby the merger of the two entities was accomplished via an in-kind contribution. Following the completion of this transaction, Hapag-Lloyd will continue to be listed and headquartered in Hamburg, Germany. Rating Methodology and Scorecard Factors In assessing the credit quality of Hapag-Lloyd, we apply our Global Shipping Rating Methodology, published in February Exhibit 5 Current LTM 3/31/2017 Global Shipping Industry Grid [1][2] Factor 1 : Scale (20%) Moody's Month Forward View As of 7/17/2017 [3] Measure Score Measure Score a) Revenues (USD illion) $8.6 aa $11 - $12 A b) Size of Fleet aa A Factor 2 : Profitability (17.5%) a) EIT Margin (3 Year Avg) 2.3% 5% - 5.5% b) ROA (NPATUI / Total Assets)(3 Year Avg) -1.4% -0.5% - 0% Factor 3 : Leverage and Coverage (30%) a) Debt / EITDA (3 Year Avg) 5.2x 5x - 6x b) RCF / Net Debt (3 Year Avg) 13.5% 13% - 15% 3.2x 3.2x - 3.5x c) (FFO + Interest) / Interest Expense (3 Year Avg) Factor 4 : Fleet Characterestics (17.5%) a) % Revenues from LT Charters b) Unencumbered Assets a a a a a a a a Factor 5 : Financial Policy (15%) a) Financial Policy Rating: a) Indicated Rating from Grid 2 b) Actual Rating Assigned 1 2 [1] All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations. [2] As of 3/31/2017 (L); [3] This represents Moody's forward view; not the view of the issuer; the numbers are pro-forma for UASC acquisition Source: Moody s Financial Metrics 5

6 Ratings Exhibit 6 tegory HAPAG-LLOYD AG Outlook Corporate Family Rating Senior Unsecured -Dom Curr Moody's Rating Stable 2 a1/lgd5 Source: Moody's Investors Service 6

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8 Contacts CLIENT SERVICES Mario Santangelo Associate Managing Director Egor Nikishin Associate Analyst Maria Maslovsky VP-Senior Analyst Americas Asia Pacific Japan EMEA