Moody’s might cut GKN notes

Moody's Investors Service said it placed on review for downgrade the Ba1 senior unsecured notes ratings of GKN Holdings Ltd.

“GKN's bond ratings were solidly placed at the Ba1 rating after a solid financial performance in 2019 and good restructuring progress with operating margin improvements despite a challenging environment, for example in automotive,” the agency said in a news release.

“However, the automotive and powder metallurgy segments of Melrose, accounting for 48% of Melrose's 2019 reported revenue, are affected by the disruption in the auto sector with factories outside of China and Japan largely closed.

“In the Aerospace segment, accounting for 35% of revenue, factories are largely open but are running with reduced requirements. There is also considerable uncertainty regarding the demand evolution in both automotive and commercial aerospace end markets in the coming months and also potential for longer term implications, for example regarding commercial aircraft production rates.”

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