Bloomberg News is reporting the Moody’s Investors Service has downgraded Fiat’s debt by one step, from Ba1 to Ba2 (two steps below investment grade) with a negative outlook. Moody’s cites concerns that a merger with Chrysler will make the Italian company responsible for the American automaker’s debt. Chrysler is rated three grades lower than Fiat.
Moody’s believes the integration of Fiat and Chrysler could result in the companies having to support one another should financial problems arise. Moody’s was also critical of Fiat’s model replacement cycle saying it hurts Fiat’s competitive position in the European market. Fiat recently announced additional delays for new Alfa Romeo models. Fiat will have some new vehicles coming, including the Lancia Ypsilon and Fiat Panda, and the Freemont, the Fiat version of the Dodge Journey, continues to sell ahead of expectations.
The ratings agency does consider Fiat’s cash position to be good, though there is concern over the possible cash outlay if Fiat exercised its options to buy outh the stake currently held by the UAW’s Voluntary Employee Beneficiary Association (VEBA), even though Fiat has not indicated it is in any rush to buy the VEBA stake.
Posted on Allpar • by Bill Cawthon
Moody’s believes the integration of Fiat and Chrysler could result in the companies having to support one another should financial problems arise. Moody’s was also critical of Fiat’s model replacement cycle saying it hurts Fiat’s competitive position in the European market. Fiat recently announced additional delays for new Alfa Romeo models. Fiat will have some new vehicles coming, including the Lancia Ypsilon and Fiat Panda, and the Freemont, the Fiat version of the Dodge Journey, continues to sell ahead of expectations.
The ratings agency does consider Fiat’s cash position to be good, though there is concern over the possible cash outlay if Fiat exercised its options to buy outh the stake currently held by the UAW’s Voluntary Employee Beneficiary Association (VEBA), even though Fiat has not indicated it is in any rush to buy the VEBA stake.
Posted on Allpar • by Bill Cawthon
