Aston Martin Bonds Hit Lowest Since 2017 on Moody’s Downgrade
(Bloomberg) -- British luxury auto manufacturer’s notes plummet to lowest since pricing in March 2017 after Moody’s downgraded its corporate family rating to B3 from B2.
GBP285m bonds due in April 2022 drop 4.2 pence to 92.4, according to CBBT prices
Moody’s cited "lack of progress in terms of volume growth and profitability” for the cut, while maintaining the company’s stable outlook.
Also given the ongoing weak and competitive market environment, Moody’s now considers it unlikely that leverage and free cash flow will be in line with a B2 rating by 2020: statement
NOTE: Co. trimmed sales forecast in July 24 to 6,300 vehicles from 7,100 in May
In the event of a no-deal Brexit, co. would face issues including those related to the supply chain and an economic slump, Felix Fischer, global head of research and head of Europe at Lucror Analytics says by email.
"A weaker sterling would help cost base, but I don’t think it would mitigate the overall impact”: Fischer
"Market for high performance luxury vehicles is typically more resilient to market pressures compared to higher volume premium brands,” CreditSights analysts Brian Studioso and Thomas Swift write in a note.
Say co.’s steep reduction in FY19 production levels highlights prudence regarding inventory management ahead of the launch of the DBX SUV and stresses the “level of market weakness that would force Aston Martin to lower its full year guidance by 11%”
--With assistance from Laura Benitez.