Moody’s downgrades Schaeffler

Moody’s Investors Service said it downgraded the senior unsecured ratings of Schaeffler AG to Ba1 from Baa3.

Concurrently, Moody’s withdrew Schaeffler’s issuer rating, previously Baa3, and assigned a Ba1 corporate family rating and Ba1-PD probability of default rating to the group.

Moody’s also downgraded the senior notes issued by Schaeffler Finance BV, the fully owned and guaranteed financing vehicle of Schaeffler, to Ba1, from Baa3.

The outlook is stable.

This rating action concludes a review for possible downgrade started on March 26, the agency said.

“The downgrade of Schaeffler’s ratings is driven by the continuing erosion of Schaeffler’s operating profit margins in an ongoing challenging automotive sector environment, and the resulting higher financial leverage, which are no longer commensurate with a Baa3,” said Matthias Heck, a Moody’s vice president, senior credit officer and lead analyst for Schaeffler, in a press release.

“The stable outlook reflects the company’s strong liquidity and the expectation that the initiated efficiency measures will help to maintain margins and leverage at a level which is commensurate with the Ba1 rating,” added Heck.

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