S&P rates Fiat Chrysler notes BB-, upgrades notes

Standard & Poor’s said it assigned a BB- rating to the proposed $3 billion senior unsecured notes to be issued by Fiat Chrysler Automobiles NV.

S&P also said it assigned a recovery rating of 4 to the proposed notes, reflecting 30% to 50% expected default recovery.

The recovery rating on the proposed notes assumes that Fiat will use the proceeds of the issuance for general corporate purposes.

The BB- rating and 4 recovery rating on the existing senior unsecured debt instruments issued and guaranteed by Fiat are unchanged.

The agency also said it raised the ratings to BB- from B on the $3.08 billion 8¼% second-lien secured notes due 2021 issued by FCA US LLC, formerly the Chrysler Group LLC.

S&P also said it revised the recovery rating on these notes to 3 from 6, reflecting 50% to 70% expected default recovery.

The upgrade reflects an expectation that FCA US will call and repay imminently the $2.875 billion 8% second-lien secured notes due 2019.

The recovery ratings on the proposed and existing senior unsecured debt instruments are supported by the group’s significant asset value, Fitch said.

The ratings are constrained by its high leverage and the amount of senior debt that ranks above the senior unsecured liabilities in the capital structure, the agency said.

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