Fitch rates Autometal BB

Fitch Ratings said it assigned to Autometal SA a foreign-currency issuer default rating of BB, local-currency issuer default rating of BB and national long-term rating of A+(bra).

Fitch also said it assigned an expected rating of A+(bra) to Autometal's proposed debenture issuance.

The target amount of the proposed debenture will be up to R$250 million; the final amount of the issuance will depend on market conditions and the tenor is projected to be up to five years, the agency said.

The proceeds will primarily be used to refinance existing debt and general corporate purposes.

The outlook is stable.

The ratings reflect Autometal's market position as a medium-size regional player in the auto parts industry with annual sales about $1 billion, diversified business model, good margins, low leverage, solid liquidity and positive track-record in integrating acquired operations, Fitch said.

The ratings also consider risks associated with Autometal's exposure to the volatility of raw material costs and its development of operations in a fragmented and cyclical industry with increasing competition, the agency said.

The ratings are constrained by the weaker credit profile of Autometal's parent company, CIE Automotive, Fitch added, and the expectation that it will maintain a maximum high dividend payout ratio of 55% in the medium term.

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