Fitch lowers Chrysler rating to 'B' on drop in unit volumes, revenues
Fitch Ratings lowered the issuer default rating of Chrysler LLC from 'B+' to 'B,' citing the decline in unit sales and revenues, modest share losses and certain strategic initiatives that have impacted the company's operating performance.
CHICAGO -- Fitch Ratings lowered the issuer default rating of Chrysler LLC from 'B+' to 'B,' with a negative rating outlook.
The global rating agency cited the decline in Chrysler's unit sales and revenues, modest share losses and certain strategic initiatives that have impacted the company's operating performance.
Fitch has also downgraded Chrysler's senior secured first-lien bank loan from 'BB+/RR1' to 'BB/RR1' and senior secured second-lien bank loan from 'BB+/RR1' to 'CCC+/RR6'.
The automotive company's restructuring efforts remain on track and liquidity is expected to remain adequate over the near term to fund restructuring costs and operating losses through a period of economic weakness, Fitch noted.
Chrysler's efforts to sharply curtail fleet sales and convert its sales/production strategy to a 'demand-pull' model from a 'production-push' model will affect sales declines in 2008, Fitch said.
Chrysler's cash flow will remain negative in 2008, due to capital investments, restructuring costs and other one-time items. A return to positive free cash flow will require continued execution on the company's cost reduction efforts and a stabilization in market share and industry sales.
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