Moody's shifts Gestamp view to positive

Moody's Investors Service changed the outlook to positive from stable and affirmed Gestamp Automocion, SA's corporate family rating at B1 and the probability of default rating at B1-PD. Moody's also affirmed the B1 instrument ratings of the backed senior secured notes issued by Gestamp and Gestamp Funding Luxembourg SA.

“The positive outlook reflects Moody's expectation that Gestamp will manage to generate positive free cash flows from 2020 onwards, supported by improved profitability, reduced growth capex spending and absent of dividend payments until including during 2021. This should allow the company to gradually reduce gross debt levels from 2021,” the agency said in a press release.

Moody's said it also forecasts an improvement in margins towards 5% (Moody's adjusted EBITA) in 2021 and to above 5% from 2022 onwards.

Better margins should support a deleveraging into a range of 4x-4.5x (Moody's adjusted) from 2021and to below 4x from 2022, which could lead to a rating upgrade to Ba3, Moody’s said.

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