Moody’s ups Schaeffler notes, assigns Baa3

Moody's Investors Service said it withdrew Schaeffler AG's Ba2 corporate family rating and Ba2-PD probability of default rating and assigned Baa3 long-term issuer rating, in line with the agency's practice for corporates with investment-grade ratings.

The agency also assigned Ba1 corporate family rating and Ba1-PD probability of default rating to Schaeffler Verwaltung Zwei GmbH (to be renamed to IHO Verwaltungs GmbH, IHO-V).

Concurrently, Moody's upgraded by Schaeffler Finance BV’s senior secured notes to Baa3 from Ba2 and senior unsecured notes to Baa3 from Ba3.

In addition, the agency assigned a Ba1 rating to proposed issuance of senior secured notes issued by IHO-V.

Furthermore, Moody’s upgraded the rating of existing senior secured bonds issued by Schaeffler Holding Finance BV to Ba1 from Ba3, but expects to withdraw it after successful placement of the new senior secured bonds issued by IHO-V.

All outlooks are stable.

Moody’s said the action effectively splits Schaeffler’s existing corporate family rating into two standalone ratings: one for Schaeffler and one for IHO-V. Previously, Schaeffler’s corporate family rating also comprised debt at holding level, primarily owing to the existence of cross default language in the credit facilities at holding level.

The cross default language has fallen away with the refinancing of the credit facilities at IHO-V. That means, the agency said, that the correlation of probability of default between debt at Schaeffler level and debt at IHO-V level has declined further and now allows for the assignment of two different ratings.

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