Fitch drops Michelin

Fitch Ratings said it has downgraded Compagnie Generale des Etablissements Michelin's long-term issuer default rating and senior unsecured rating to BBB- from BBB, respectively.

Michelin's short-term issuer default rating has been affirmed at F3, the agency said, noting that the outlook for the long-term issuer default rating is negative.

Fitch said it has additionally downgraded Michelin's €500 million hybrid bond rating to BB+ from BBB-.

The agency said it has also downgraded the long-term issuer default rating and senior unsecured rating of Compagnie Financiere Michelin to BBB- from BBB, adding that the downgrades reflect the further deterioration of Michelin's financial profile beyond Fitch's previous expectation amid the accelerating downturn in the global auto markets to a level not commensurate with a BBB rating.

Fitch calculates that the group's lease adjusted net leverage significantly increased to 2.7x at FYE08 from 1.8x at FYE07 and the agency said it does not expect a marked improvement in its financial profile before 2010.

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