Moody's cuts BorgWarner to junk

Moody's Investors Service said it lowered BorgWarner Inc.'s senior unsecured notes to Ba1 (LGD4, 63%), from Baa3 and assigned corporate family and probability-of-default ratings of Ba1.

The agency assigned a speculative grade liquidity rating of SGL-4.

The outlook is negative.

Moody's noted that BorgWarner is an important supplier of power train components to the automotive industry, and that the company's technological capabilities and global presence should enable it to sustain a leading position in its industry.

Nevertheless, the severe downturn in automotive production has led to a significant erosion of earnings and cash flow, and even with the benefits of aggressive restructuring initiatives being implemented by the company, credit metrics are not expected to return to levels consistent with an investment grade rating over the intermediate term, the agency said.

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