Moody’s Investors Service has today downgraded the corporate family rating (CFR) and probability of default rating (PDR) of Fiat S.p.A. (“Fiat”) to Ba2 from Ba1.
The company has also downgraded the debt issued by Fiat’s rated subsidiaries Fiat Finance & Trade, Fiat Finance North America and to Ba3 from Ba1 as well as Fiat Finance Canada’s provisional rating to (P)Ba3 from (P)Ba1.
“Today’s rating action reflects Moody’s expectation that the creditworthiness of Fiat and Chrysler will become more closely aligned over time as the strategy and operations of the two groups becomes progressively more intertwined,” said Falk Frey, Moody’s lead analyst for Fiat.
Moody’s also notes that there are cross-default clauses included in the bonds issued by Fiat under its Global Medium Term Note programme that point to the financial linkage between two companies.
In addition, Moody’s Investors Service on Wednesday downgraded Belgian bank KBC Group NV (KBC.BT) amid concerns about the solidity of European banks as worries grow over the continent’s economic and financial situation.
The announcement comes shortly after the rating company cut the credit ratings of two French banks because of their exposure to Greece’s debt, highlighting growing risks to Europe’s financial sector from a deepening euro zone sovereign debt crisis.