Moody's cuts Group 1

Moody's Investors Service said it downgraded Group 1 Automotive's corporate family rating and probability-of-default ratings to Ba3 from Ba2, and senior subordinated notes to B2 (LGD5, 84%) from Ba3 (LGD5, 75%).

The outlook is negative.

These actions conclude the review for downgrade that began on April 2.

Moody's said the downgrade considers the increase in leverage resulting from a combination of significant debt-financed acquisitions and share repurchases.

As of March, the issuer's debt-to-EBITDA ratio was more than six times.

"Group 1's high leverage is the key rating issue at this point," Moody's senior analyst Charlie O'Shea said in a written statement. "In the event cash flows from 2007's acquisitions are sufficient to measurably reduce what could be a temporary spike in leverage, a stable outlook could result. However, if leverage is not materially reduced by the first quarter of 2009, Group 1's ratings could be downgraded further."

The Ba3 rating also acknowledges Group 1's strong market position, favorable brand mix and diverse business model, Moody's said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.