S&P ha deciso che dowgrada Fiat con calma, fra un paio di settimane. insistono sulla liquidità ancora inadeguata, secondo loro, e sul rischio legato ad un possibile scorporo dell'auto dal resto del gruppo.
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Italy's Fiat 'BB+' Rating Still On CreditWatch Negative After Announcement Of First-Half Results And Bond Issue[/FONT]
- Italian industrial group Fiat has reported 2009 first-half results.
- It has also announced the launching of a bond.
- We are maintaining our 'BB+' rating on Fiat on CreditWatch negative pending our analysis of these factors' impact on the ratings.
- The negative CreditWatch status reflects Fiat's "weak" liquidity profile at end-March 2009 and the possible impact on its credit quality of the Chrysler alliance.
MILAN (Standard & Poor's) July 23, 2009--Standard & Poor's Ratings Services said today that its 'BB+' long-term corporate credit rating on Italian industrial group Fiat SpA remains on CreditWatch with negative implications,
where it was placed on Jan. 22, 2009. The 'B' short-term corporate credit rating, which is not on CreditWatch, remains unchanged.
The long-term rating remains on CreditWatch pending our analysis of the impact on the ratings of Fiat's 2009 first-half results and its proposed bond issue (not rated).
"The negative CreditWatch status reflects our view of Fiat's liquidity profile, which we classified as "weak" at end-March 2009," said Standard & Poor's credit analyst Barbara Castellano. It also acknowledges the risks we see for Fiat's creditworthiness as a result of our opinion of the management team's high level of engagement in the
new entity Chrysler Group LLC (not rated); Fiat's CEO is now the CEO of Chrysler.
Furthermore, the negative CreditWatch implications reflect--albeit to a lesser extent—Standard & Poor's uncertainty about the future of the group's structure given Fiat's stated interest in new alliances or mergers to enlarge
its auto business. The last point remains an event risk that we cannot specifically factor into the ratings; if, for example, Fiat were to enlarge its auto activities, it might then spin them off from the group.
On July 22, 2009, Fiat reported 2009 first-half results. Notwithstanding the extremely tough trading conditions for the auto, truck, and equipment businesses, the group reported a positive trading profit for each of these three main businesses. At the auto division, the effect of car-buying incentive schemes supported Fiat Group Automobile's unit sales in the second quarter. In the first half, this division (including also Ferrari and Maserati) reported a €254 million operating profit before restructuring charges.
Agricultural and construction machinery manufacturer CNH Global N.V. (BB+/Watch Neg/--) suffered in the first half from weak demand, with total revenues down 17.4% year on year during the period, and operating profit down about 70%. The truck business, Iveco, saw unit sales decrease 56.1%, but its trading profit turned positive, by €6 million, after the negative first-quarter figure. Overall, the group reported €136 million of free operating cash flow for the half. Reported net debt was €5.7 billion, down from €6 billion at year-end 2008.
Generally speaking, prospects for the markets where Fiat operates remain gloomy in our opinion. In this environment, Fiat has confirmed its 2009 targets of €1 billion of operating profit and about €1 billion in debt reduction. (ndr. traspare una punta di scetticismo...)
At end-June, Fiat reported €6.4 billion of cash and marketable securities, versus €3.9 billion at year-end 2008. Debt maturities in the next 12 months total €5.5 billion. We understand that these maturities are currently covered, but there is still no headroom under the group's available committed bank line.
The group has announced the launching of a bond, which we believe could help strengthen its liquidity profile; the profile showed improvement at the end of June, but continues to be tight in our view. "We believe that the Fiat group's ability to once again use all financing channels--bank lines, ABS, bonds, and the like--could represent a step toward
restoring a more solid liquidity position," said Ms. Castellano. Our resolution of the CreditWatch listing will focus on the following:
- Fiat's capacity to generate cash and fulfill its financial obligations;
- Fiat's ability to strengthen its liquidity profile and sustain it in light of continuing weak demand in the three main businesses;
- The evolution of the Fiat group's operating performance in the current difficult market environment; and
- Our opinion of the prospective effect of the Chrysler alliance on Fiat's business and financial profile. Notwithstanding an initial 20% ownership stake, we believe Fiat's involvement in and control of the direction of
Chrysler will be more significant.
"We aim to solve the CreditWatch listing in the next couple of weeks," said Ms. Castellano. "Any downgrade is likely to be limited to one notch."