Moody’s plans to downgrade Aston Martin as cash reserves diminish image

Aston Martin has been put under review by Moody’s Investors Service for a credit downgrade as the luxury carmaker spends money from its cash reserves.

The British carmaker controlled by Investment Dar Company of Kuwait currently has a non-investment grade B3 rating, which means the company has „high credit risk”. However, the rating may be lowered after Aston Martin reported negative free cash flow in the third quarter, Moody’s announced today in a statement.

“The review was prompted by a significant deterioration in Aston Martin’s liquidity profile as per end September 2012, caused by a much weaker cash generation and operating performance in the third quarter,” Moody’s analyst Falk Frey wrote.

Aston Martin is currently in advanced talks to sell new shares to investors in order to boost funding and ensure it can pursue growth plans, said company spokeswoman Janette Green on November 28. Moody’s believes a capital increase would have a „material positive” impact on finances, the rating agency said today.

Investment Dar has been looking for an investor for Aston Martin for months, people familiar with the matter told Bloomberg. Sales fell 20 percent to 2,520 vehicles in the first nine months of this year, with Aston Martin posting an operating loss of £3.6 million.