Moody’s cuts GKN Holdings debt

Moody's Investors Service said it downgraded the senior unsecured debt and program ratings of GKN Holdings plc to Ba1/provisional Ba1 from Baa3/provisional Baa3.

GKN Holdings is the finance, investment and holding company of British multinational automotive and aerospace components manufacturer GKN plc.

Concurrently, the agency assigned a Ba1 corporate family rating and a probability of default rating of Ba1-PD for GKN Holdings.

The ratings were placed on review for further downgrade.

"Downgrading GKN reflects our expectations that its leverage will rise beyond levels commensurate with an investment grade rating following its recent acquisition by Melrose Industries, due to GKN's already high standalone leverage, declining operating profits and Melrose's more aggressive financial policy," Matthias Heck, Moody’s vice president, senior credit officer and lead analyst for GKN, said in a news release.

"The subsequent downgrade review process will focus on the impact Melrose, the new shareholder, will have on GKN's financial policy, funding structure, and its business profile."

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