Moody's shifts Constellation Automotive view to negative

Moody's Investors Service said it changed its outlook for Constellation Automotive Group Ltd. to negative from stable but affirmed the B3 corporate family rating and B3-PD probability of default rating.

The agency also affirmed the B2 backed senior secured instrument ratings of the €400 million and £400 million first-lien term loans and the £250 million first-lien revolving credit facility issued by Constellation Automotive Ltd., and the B2 rating of the £695 million of backed senior secured notes issued by Constellation Automotive Financing plc. Moody's concurrently affirmed the Caa2 rating of the £325 million of backed senior secured second-lien term loan issued by Constellation Automotive Ltd.

“The change of outlook to negative from stable reflects (1) the recent significantly weak operating performance because subdued demand due to a lack of new car volumes combined with an underperforming used car market leading to materially higher leverage well above Moody's expectations (2) materially higher leverage than Moody's expectations which will remain elevated for at least the next six months and (3) risks to profitability from higher operational leverage following the recent capital-intensive pivot to produce ‘retail ready’ cars and the company's decision to maintain its storage and refurbishment capacity despite the weaker market conditions,” the agency said in a press release.

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