Moody’s downgrades Fiat to Ba3
Rating agency Moody’s has cut its rating on Italy’s Fiat to Ba3 with negative outlook. The rating action reflects the company’s reliance on the Italian declining home market.
Moody’s could also consider further downgrades if net industrial cash flow were to exceed a negative €2bn in 2012 and not improve in 2013.
“The one-notch downgrade of Fiat’s ratings to Ba3 reflects the decline in demand for Italian cars recorded so far this year and in our outlook for demand till the end of 2012 and beyond,” Moody’s said.
Moody’s expects demand for light vehicle in western Europe to decline by 8% and a further 3% in 2013. The European passenger car market accounts for over 60% of Fiat revenues excluding US carmaker Chrysler.
The rating agency also warned about the impact of overcapacity in the domestic marketwith estimated demand in Italy to fall by 20 percent this year and to stabilise next year.