Moody's ups Schaeffler to high grade

Moody's Investors Service said it assigned a Baa3 long-term local-currency issuer rating to Schaeffler AG (SAG) and concurrently withdrew the Ba1 corporate family and Ba1-PD probability of default ratings, as per the agency's practice for corporates moving up to investment grade. Concurrently, the agency upgraded the group's senior unsecured rating to Baa3 from Ba1 and the rating on its debt issuance program to (P)Baa3 from (P)Ba1. The outlook on all ratings has been changed to stable from positive.

"The upgrade to Baa3 recognizes SAG's solid operating performance in a challenging automotive market environment in 2022 and its credit metrics which we expect to improve and be maintained at levels in line with a Baa3 rating over the next two years," said Goetz Grossmann, a Moody's vice president and lead analyst for SAG, in a press release.

"While profitability in SAG's automotive business remains constrained, we expect the margins to visibly strengthen over the next two years on a recovery in global light vehicle sales, improving production efficiency and fix cost reductions, despite likely persistent inflation and a muted economic growth environment," Grossman said.

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