PSA Peugeot Citroen said it is close to finalize deal for refinancing debt at Banque PSA Finance.
According to PSA Peugeot Citroen talks with lenders are ‘on track’ and an agreement should be reached by Christmas. Peugeot’s banking unit Banque PSA Finance (BPF) tries to get a 4 billion-euro ($5.3 billion) syndicated loan to be able to refinance debt. The self-arranged deal, which is being marketed to lenders, might include a 3-year forward-start revolving credit and a 5-year term loan.
This loan package is part of the 11.5 billion-euro funding target which BPF began to raise from its banking pool in October, part of a lager plan which the company announced on October 24th aimed at safeguarding the finances at the bank. BPF provides loans for car dealers and consumers, but it has come under pressure when Peugeot’s sales began to fall.
“This may support the bank’s investment grade,” said Pierre Bergeron, a credit analyst at Societe Generale in Paris. “But Peugeot’s sales were very bad again in October and November and this will weigh on the parent company’s rating, which itself weighs on Banque PSA’s rating.”
The European Union saw the auto sales drop 7.6% through November, reaching the lowest level since 1993. Peugeot’s sales fell 13%, although the company tried to match car-loan rates offered by VW.