Fitch changes Volkswagen to stable

Fitch Ratings said it affirmed Volkswagen AG's long-term issuer default rating at BBB+ and short-term issuer default rating at F2.

The outlook on the long-term issuer default rating was revised to stable from negative.

“The rating action reflects the greater clarity about the operational and financial effect of the diesel issue. Fitch acknowledges that risks of further legal actions have not disappeared but believes that these risks have become manageable at the current rating level and incorporated in the ratings,” Fitch said in a news release.

“In particular, we believe that the group could accommodate several billion euros in additional fines and/or recall and repair costs and still sustain its current ratings.

“In addition, the group has demonstrated a strong resilience since the start of the emissions crisis in late 2015 and we expect only a limited impact on credit metrics at the exit point by 2019-2020, when the bulk of cash outflows will have hit free cash flow (FCF) and net debt.”

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