S&P: ZF Friedrichshafen view to positive

S&P said it revised the outlook on ZF Friedrichshafen AG to positive from stable and affirmed its BB+ long-term corporate credit rating.

The agency also affirmed the BB+ issue ratings on the senior unsecured debt instruments issued by ZF and subsidiaries ZF North America Capital Inc. and TRW Automotive Inc. The 3 recovery rating on these instruments is unchanged, reflecting an expectation of meaningful recovery for debtholders (50%-70%; rounded estimates: 55% for the ZF and ZF North America debt and 65% for the TRW debt), in the event of a payment default.

S&P said the outlook revision reflects ZF's debt reduction, of about €1.6 billion in 2016, through disposal proceeds and free operating cash flow (FOCF) generation.

“Credit measures are now at the upper end of our target range for the rating of 25%-30% fund from operations (FFO) to debt, with 29% posted at the end of December 2016,” the agency said in a news release.

“We expect further strengthening of credit ratios in 2017 and we see a one-in-three possibility that we will upgrade ZF within a year if the company develops according to our expectations, which includes ZF maintaining its financial policy framework, and the ratio of FFO to adjusted debt remaining consistently above 30%. This includes limited additional debt incurred in future potential acquisitions in a consolidating auto-supplier industry.”

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.