Moody's drops Sanluis Rassini

Moody's Investors Service said it downgraded Sanluis Rassini, SA de CV's corporate family rating to Caa1 from B2.

The rating remains on review for possible further downgrade.

According to Moody's, the downgrade reflects the deterioration of Sanluis Rassini's liquidity situation as weaker than anticipated free cash flow and low cash reserves create a significant challenge for the company to refinance upcoming debt maturities under its secured restructured credit agreement.

On July 31, the company started negotiations with its lenders to reschedule its RCA debt obligations, the agency said, adding that weaker than anticipated cash generation primarily stems from the ongoing volume drop in the company's key leaf spring suspension component business in the Nafta region and volume losses because of the American Axle strike, which could not be offset by positive earnings trends in the company's Brazilian suspension components business, recovery in its brakes division and by benefits of steel price pass through agreements negotiated with major OEMs.

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