Moody's cuts Continental

Moody's Investors Service said it downgraded the issuer rating of Continental AG. Concurrently, Moody's downgraded the senior unsecured ratings of Continental and subsidiaries Conti-Gummi Finance BV and Continental Rubber of America, Corp. The outlook is negative.

“The rating downgrade to Baa2 ratings reflects the further deterioration in the operating environment for European automotive parts suppliers, the resulting pressure on Continental's profit margins and financial metrics, as well as the company's elevated distributions to shareholders,” said Matthias Heck, a Moody's vice president, senior credit officer and lead analyst for Continental, in a press release.

“The negative outlook is driven by the current uncertainty facing the auto sector for 2020 and beyond. The spreading of Covid-19 across Europe that has led to weaker consumer sentiment could make it challenging for Continental to sustain leverage and cash flow metrics at levels required for a Baa2,” added Heck.

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