Moody’s upgrades Fiat Chrysler outlook to ‘positive’

Michael Wayland
The Detroit News

Moody’s Investors Service on Friday improved its outlook on Fiat Chrysler Automobiles NV to “positive” from “stable.”

The brighter outlook is based on the automaker’s Jeep brand and favorable sales trends in North America and Europe, according to the credit rating organization.

Fiat Chrysler earned about $1.3 billion (1.2 billion euros) for the third quarter in North America, up $706 million (632 million euros) from the same time a year ago. Europe in the same quarter was up $88.3 million (79 million euros) from 2014 to $22.3 million (20 million euros).

“We also expect that FCA will further simplify its debt structure and will reduce its indebtedness in the course of 2016, which will drive an improvement in its financial profile,” said Yasmina Serghini, a Moody’s Senior Credit Officer and lead analyst for Fiat Chrysler, in a statement.

Fiat Chrysler CEO Sergio Marchionne on a call with financial investors and news media last month stressed it would push to repay its bonds for the North America-based operations in 2016. The company wants to repay the bonds due to interest rates above current market conditions and lift restrictions on how it uses its cash.

At 3 p.m. Friday, Fiat Chrysler shares on the New York Stock Exchange were about even at $13.55 per share. The company trades under the symbol “FCAU.”

Moody’s affirmed its “B1” rating on the automaker, which it was assigned two days after Fiat Chrysler was listed on the NYSE in October 2014.

“B” ratings are considered speculative and are subject to high credit risk, according to Moody’s.

Risks include the “high level of competition” in Europe; uncertainties about reviving the Alfa Romeo brand; and the company’s high-investment strategic plan that “will weigh on free cash flow.”

(313) 222-2504