Fitch: GKN outlook stable

Fitch Ratings said it affirmed GKN Holdings plc's long-term issuer default rating and senior unsecured rating at BB+, affirmed its short-term issuer default rating at B and revised the outlook to stable from negative.

The outlook revision follows the announcement of a £423 million rights issue, the proceeds of which will be used mainly to reduce the group's debt.

The agency said the outlook change reflects its view that the rights issue will materially strengthen GKN's balance sheet and financial flexibility and partially mitigate Fitch's ongoing concerns about the weakness and highly uncertain recovery of the global automotive and off-highway markets and deteriorating outlook for the group's so far well-performing aerospace operations.

The change also takes into account management's proactive approach in addressing refinancing issues in combination with the significant and further accelerated restructuring and cost-cutting measures to adapt its operations to lower demand, Fitch said.

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