Moody’s Investors Service downgraded Banque PSA Finance to one level below the investment grade.
Today, April 16th, Moody’s announced that PSA Peugeot Citroen’s bank, Banque PSA Finance, was downgraded one step from Ba1 to Baa3. The outlook is stable which means that the rating will not be reduced again any time soon. In 2012 Peugeot arranged for French state guarantees of 7 billion euro of the bank’s new bond sales and 11.5 billion euro in refinancing, to keep the company’s investment grade at Moody’s.
“BPF’s rating is eventually constrained by its lack of business diversification and inherent credit linkages with its lower-rated industrial parent, as its activities are exclusively linked to those of PSA,” Guillaume Lucien-Baugas, an analyst at Moody’s in Paris, said in the statement.
Peugeot’s sales in France dropped 19% during the first quarter, in Germany fell 38%, while the Citroen unit dropped 27%. Analysts predict that the European auto market will fall foe the sixth consecutive year in 2013. For last year the automaker reported a 576 million euro loss, as it spent around 200 million euro per month. The automaker will soon apply its restructuring plan which includes closing the Aulnay plant and eliminating 11,200 jobs in France.