Moody's upgrades VAC

Moody's Investors Service said it upgraded VAC Finanzierung GmbH's corporate family and probability-of-default ratings to B3 from Caa1 and its €135 million senior secured notes due 2016 to Caa1 (LGD4, 63%) from Caa2 (LGD4, 64%).

The outlook was changed to stable from positive.

The agency said the upgrade acknowledges the recent rebound in order intake across all divisions resulting in strong improvements in the company's operating performance and credit metrics. It also considers improved end-market conditions and favorable global demand trends for magnetic products.

At the same time, Moody's noted that raw material prices for key inputs such as nickel, cobalt and rare earth metals have increased significantly over 2010, although automatic pass-on clauses in the majority of the company's contracts enabled the group to recover most of the volatility.

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