Moody’s cuts rating, Fiat shares drop image

Because Moody’s decided to cut Fiat’s rating to ‘B1′ from ‘Ba3′, the Italian automaker’s shares were slightly down.

Moody’s explained the decision, citing the lower than expected results from last year, the problems it faces for 2014 with the advent of its eroding profitability triggered by declining economies in Latin America. The new, ‘B1′ is below the investment grade, which would make it more difficult and expensive to Fiat to rally the financing it needs to swing to profitability on the loss-making European region.

This morning, at 08.06 GMT, the Italian carmaker’s stock slid 0.28 % at 7.22 euros euros, compared with a broadly flat Milan blue-chip index.

The very slight share slip owes to the fact that investors were largely admonished against the rating cut, as traders cautioned something like this could happen following Moody’s decision to put Fiat and its rating under assessment for a possible downgrade earlier in January, just a few days after the automaker’s CEO disclosed it finally hit the jackpot, signing the deal that would see Chrysler under their control in a $4.35 billion transaction.

Via Reuters