Moody’s Investors Service has today placed on review for downgrade the Baa1 issuer rating of Denmark-based shipping and oil company A.P. Møller-Mærsk A/S. This follows the company’s announcement that it will become an integrated transportation and logistics company while separating the oil and oil related activities over the next 24 months.

“We have placed the ratings of Maersk on review for downgrade because we believe that its business diversification will reduce significantly with the separation of its energy businesses which represented 62 percent of EBITDA as of the first half of 2016,” said Maria Maslovsky, a Moody’s Vice President-Senior Analyst and lead analyst. “The review will likely result in a downgrade of at least one notch, although ultimately the rating will depend on the amount of debt that will be allocated to the integrated transport and logistics company, as well as any remaining ownership interests in the energy businesses.”

The review will primarily focus on the actions that Maersk intends to take in order to unlock value and create synergies within the newly established transportation and logistics division, the execution risk and timing related to the separation of the energy businesses, as well as the expected impact on financial metrics. The review will also focus on the company’s future financial policy which includes defined key financial ratio targets in line with an investment grade rating. Moody’s expects to conclude the review by the end of December 2016.

On September 22, Maersk announced that it will become an integrated transportation and logistics company with oil and oil related businesses to be separated from the company via joint ventures, mergers, listings, or other transactions. The new Transport & Logistics business will consist of Maersk Line, APM Terminals, Damco, Svitzer and Maersk Container Industry. Maersk expects to generate an improvement in return on investment of up to two percent over three years and the company envisions investments primarily in acquisitions.

The energy business will consist of Maersk Oil, Maersk Drilling, Maersk Tankers and Maersk Supply Service. Maersk aims to find solutions for the individual entities within this business within 24 months.

Moody’s views all of Maersk’s businesses as currently pressured, with oversupply driving down freight rates in the container shipping business resulting in all major liners, including Maersk Line, reporting negative earnings in the second quarter of 2016. Low oil prices are negatively impacting the energy businesses while reduced spending by the major oil firms puts negative pressure on the drilling business.

Moody’s acknowledged that the ultimate credit profile of the company will be greatly influenced by the application of proceeds, if any, from the separation of oil and oil related business entities.