Moody's rates Gestamp Ba3

Moody's Investors Service said it assigned a Ba3 rating to the €400 million guaranteed senior secured notes due 2026 launched by Gestamp Automocion, SA.

Moody's also said it affirmed Gestamp's corporate family rating at Ba2, probability of default rating at Ba2-PD and Ba3 instrument rating of the existing €500 million notes due 2023 issued by Gestamp Funding Luxembourg SA.

The outlook is stable.

The ratings reflect an expectation that Gestamp's financial leverage will improve in 2018 due to a combination of gross debt reduction and profit growth, Moody's said.

The issuance of the new notes will extend the debt maturity profile and further improve Gestamp's liquidity situation, the agency said.

The ratings also consider the company's solid business profile, reflecting strong and growing market positions, technology leadership and a diversified base of established customer relationships, the agency said.

The ratings are constrained by dependency on global light vehicle production levels, which are highly cyclical, and its sustained negative free cash flow generation, which results from its high ongoing capital expenditure program, Moody's said.

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