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Fitch puts auto suppliers on watch
Fitch Ratings said it placed the issuer default ratings of seven U.S. auto suppliers on Rating Watch negative based on the impact of a potential bankruptcy filing by General Motors Corp. and Fitch's view that this would be followed by a bankruptcy at Ford Motor Co.
The companies on watch are American Axle & Manufacturing Holdings, Inc. (B), ArvinMeritor Inc.
(B), Hayes-Lemmerz International, Inc. (B), Johnson Controls, Inc. (A-), Tenneco Inc. (BB-), TRW Automotive Holdings Corp. (BB), Visteon Corp.
(CCC) and their subsidiaries.
Fitch said that in 2009, auto suppliers are already facing a steep global downturn in auto production, including a deeply depressed production forecast in the United States and Europe. In the event of a General Motors bankruptcy, the agency believes that the resulting contraction in auto production, the supply chain, trade credit and capital-access would cause widespread shutdowns and bankruptcies throughout the supply chain.
Even if the original equipment manufacturers avoid bankruptcy, major restructurings of their operations will occur, causing material changes in the operations of their tier I suppliers, the agency predicted.
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