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Fitch Ratings upgrades Renault’s credit rating from BB+ to BBB-

Fitch Ratings has upgraded Renault’s credit rating by one level from BB+ to BBB-, which is equivalent to investment grade. According to the rating’s group, Renault’s profitability is improving as it expands deliveries outside Europe through low-cost vehicles from its Dacia brand.

Thomas Corcoran, an analyst at Fitch, said in a report that the outlook for Renault is stable, which means there should be no change in the carmaker’s ratings anytime soon. He remarked that ongoing and successful diversification has resulted to an increasing share of sales outside Europe.

He noted that the success of the Datsun brand’s entry range is key to offsetting drops in sales of the core Renault models. He added that Renault’s vehicles profitability "is higher than the automotive average."

Read the entire article Fitch Ratings upgrades Renault’s credit rating from BB+ to BBB-

S&P assigned B- corporate credit rating to Tesla Motors

Standard & Poor's has given Tesla Motors Inc. below investment grade corporate debt rating of B- (junk), saying that the carmaker represents a vulnerable investment. S&P said the outlook for the rating is “stable.” The debt rating, which is way below investment grade, is unsolicited as the rating firm doesn't have a rating agreement with Tesla.

S&P, however, said there was enough investor interest to warrant with the rating. S&P said that Tesla has liability for $2.9 billion in convertible bonds. Companies usually are given junk-bond ratings if it has been determined that there is an increased risk of default.

This could be good news for investors, since junk bonds usually entail higher returns as junk-rated companies need to pay higher interest rates for access to investors’ capital.

Read the entire article S&P assigned B- corporate credit rating to Tesla Motors

Moody’s downgrades Fiat’s rating to B1 on weak results

Moody's has downgraded Fiat's rating to 'B1' from 'Ba3', citing the Italian carmaker’s weak 2013 results and challenges in achieving its forecasted figures this year. Since a 'B1' rating is four notches below investment grade, it would now be more expensive for Fiat to raise financing to turn around its loss-making operations in Europe.

The ratings agency placed Fiat's rating under review for a possible downgrade in early January, days after the Italian carmaker inked a $4.35 billion agreement to fully control Chrysler. "We have downgraded Fiat's ratings following its weaker-than-expected performance in fiscal year 2013 and our view that the company faces significant challenges in terms of achieving its outlook guidance for the current fiscal year," Falk Frey, Moody's lead analyst for Fiat, said in a statement.

"We are also concerned that Fiat may not be able to offset any further profitability deterioration in its Latin American operation through anticipated improvements in other regions and in its luxury and performance division."

Read the entire article Moody’s downgrades Fiat’s rating to B1 on weak results

Moody’s reviews Fiat’s Ba3 rating for possible downgrade

Credit ratings agency Moody's is reviewing Fiat’s Ba3 rating for a possible downgrade to reflect the impact of the carmaker’s plan to fully acquire Chrysler Group on its cash position. "The announced acquisition will materially weaken Fiat's liquidity position at a time when the company is still free cash flow negative," Moody's senior vice president and lead Fiat analyst Falk Frey said in a statement.

Moody's classifies the "Ba" level as speculative, below investment grade. Moody’s had downgraded Fiat's rating to Ba3 -- three levels below investment grade -- in October 2012 during the European economic slump.  Fiat reached an agreement on Jan. 1, 2014 to acquire the 41.46-percent stake in Chrysler it does not already own from a UAW’s retiree healthcare trust for $4.35 billion. The deal is expected to be finalized on or before Jan. 20.

The agreement is expected to further facilitate integration of the financial and operating strategies of Fiat and Chrysler, Moody's said. While Chrysler is the source of earning for Fiat at the time when vehicle sales in Europe is weak, the two carmakers are forced to manage their finances separately. Moody's said that Fiat's remaining cash, its unused credit facilities and its operating cash flow should be enough to meet its cash needs in 2014.

Read the entire article Moody’s reviews Fiat’s Ba3 rating for possible downgrade

Moody’s Investors Service Inc. has upgraded the credit-rating outlook of Japanese carmakers Toyota and Honda to stable from negative, citing their recovery from natural disasters and the benefits of a depreciating yen. Moody’s also affirmed their credit ratings at Aa3 for Toyota and A1 for Honda, according to statements by the rating company.

The credit-rating outlook upgrade for Toyota comes a month after the carmaker doubled the amount raised from a bond sale, its first in eight months. Toyota sold JPY60 billion ($615 million) in bonds in a two-part offering on May 30, 2013, including three-year notes tagged at 0.289 percent, according to data compiled by Bloomberg. 

The carmaker initially targeted to raise JPY30 billion from the bond sale. Weighted average coupons on outstanding bonds sold by Toyota have dropped to 2.63 percent from 4.07 percent in the fourth quarter of 2009, according to data compiled by Bloomberg.

Read the entire article Moody’s lifts credit rating outlook for Toyota and Honda to stable

General Motors Co. is aiming for an investment grade credit rating "within the year," the carmaker disclosed in slides posted online. During presentations to analysts at GM’s test track in Milford, Michigan, chief financial officer Ammann did not use the words on the slide but instead said that the company is obviously targeting an investment grade rating “as soon as possible.”

He added that they are working toward the goal, which they hope to achieve in the near term. Smaller rival Ford Motor Co. achieved an investment grade credit rating in 2012, enabling it to get lower rates on borrowing.

The rating also increased the number of potential buyers for its bonds. In January 2013, GM chief executive Akerson said he hoped the carmaker would achieve an investment grade credit rating this year. The same month, GM treasurer James Davlin said that the carmaker was "trending toward investment grade."

Read the entire article General Motors is eyeing investment grade credit rating this year

Standard and Poor's Ratings Services raised Chrysler Group LLC's outlook to "positive" from "stable and expressed confidence that the automaker may receive an upgrade in its credit rating in the next 12 months. S&P revised its outlook even after Chrysler reported a 65% decrease in its profit in the first quarter.

S&P added that Chrysler's corporate credit rating of B+ was unchanged and it may increase if its stand-alone performance still improves and if the credit rating of Fiat SpA (its majority owner) stays at BB-. S&P explained that the change in its outlook is a representation of its prediction that despite weak results in the first quarter, Chrysler will continue to grow revenue and improve profitability.

S&P also pointed out that this works on the assumption that the North American light vehicle industry will continue to recover. It’s believed that product launches had hurt its results for the first quarter. For the first quarter of 2013, Chrysler Group posted a net profit of $166 million, a drop from $473 million a year ago. In 2009, Chrysler underwent a government-sponsored bankruptcy in 2009 that included management control by Fiat.

Read the entire article S&P raises Chrysler outlook from stable to positive

Moody's Investors Service reduced the credit rating of PSA/Peugeot-Citroen one level to four steps below investment grade. Moody’s said that a narrowing of Europe's auto market poses a threat to the company’s plans for its cash flow to be restored. Falk Frey, Moody's lead analyst for the automaker, said that the long-term rating on PSA's debt was lowered to B1 from Ba3.

He said that it has a stable outlook. In a statement, Frey said that unless the market demand in Western European recovers strongly in 2014 from the forecasted 2013 levels, PSA may have to implement more cost-saving measures beyond the restructuring plan that was unveiled. In February, Fitch Ratings lowered PSA to four levels below investment grade. Meanwhile, Standard & Poor's Ratings Services rated it at three levels lower.

PSA, the No. 2 biggest automaker after Volkswagen Group in Europe, faces the tough challenge of cutting losses as the region's auto market drops for six years in a row. This year, its stock has increased by 7.2%, givin the French automaker a value of 2.1 billion euros ($2.74 billion). In 2012, the company posted an operating loss of 576 million euros.

Read the entire article Moody’s Investors Service reduces credit rating of PSA/Peugeot-Citroen

Ford Motor Co.’s new four-year labor contract has finally been ratified and while it is getting nearer to investment grade, it hasn’t reached that level yet. The corporate credit rating on Ford and Ford Motor Credit Co. has been raised by Standard & Poor's to BB+ from BB–. It’s still a junk rating but it is considered the highest level of speculative grade. BBB– is the lowest level of investment grade, a notch higher than BB+.

S&P distributed a press release, stating that Ford's new four-year labor contract with the UAW “will allow for continued profitability and cash generation in North America.”

Backed by the strong performance in North America, Ford has a two-year track record of profits and cash flow generation in its global automotive operations. It’s not yet known if Moody’s will revise its rating of Ford too. Last Thursday, Ford executives said that the new contract is estimated to increase its labor costs less than 1% each year.

Read the entire article Standard & Poor raised the credit rating of Ford to BB+ from BB–

The U.S. hourly employees of Ford Motor Co. have ratified a new four-year agreement that will most likely result in credit-rating improvements. However, a return to investment-grade status might still be a year away. About 63% of Ford’s employees were in favor of the contract in balloting during the last two weeks, the UAW disclosed Wednesday.

Moody's Investors Service and Standard & Poor's have stated they're evaluating their credit scores on the Michigan-based company, which dropped to so-called junk status six years ago. S&P may elevate the automaker two levels to BB+, the highest non-investment grade level, the New York-based ratings company declared in a Sept. 29 statement.

It probably will assign a "stable" prospect on Ford, suggesting there's less than one-third probability that the company will be upgraded again within a year, according to auto analyst Robert Schulz at S&P. He further stated that the deal may have "some pluses and minuses on the cost side."

Read the entire article New Ford-UAW contract expected to improve firm’s credit rating