Moody's could lift AutoNation

Moody's Investors Service said it placed AutoNation, Inc.'s Ba1 corporate family rating, Ba1-PD probability of default rating and Ba2 senior unsecured notes rating on review for upgrade.

The SGL-2 speculative grade liquidity rating is unchanged.

"The review for upgrade recognizes AutoNation's steadily improving credit profile resulting from its disciplined operating strategy," Moody's senior analyst Charlie O'Shea said in a news release.

"The company has maintained a lean cost structure despite sales growth over the past few years resulting in improved sequential credit metrics while discretionary share buybacks have been utilized by the company to maintain a certain quantitative profile. Moody's review for possible upgrade will focus on AutoNation's ability and willingness to adhere to a financial policy surrounding both shareholder returns and acquisitions that ensures debt/EBITDA is sustained below 3.75 times and EBIT/Interest is sustained above 5 times, both of which would be critical to maintenance of an investment grade rating."

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