Our daily look at credit and debt ratings actions has to lead off with the news that Moody’s has lowered its ratings on Bank of America Corp. (NYSE: BAC), Wells Fargo Corp. (NYSE: WFC), and Citigroup Inc. (NYSE: C). The move was not totally unexpected, but it’s a doozy nevertheless.
In a ratings action on sovereign debt, Standard & Poor’s lowered its long-term counterparty credit rating on seven Italian banks from ‘A+’ to ‘A’ and affirmed the agency’s ratings on short-term debt at ‘A-1’. The seven banks are Mediobanca SpA, Findomestic Banca SpA, and Intesa Sanpaolo SpA and its core subsidiaries Banca IMI SpA, and Banca Infrastrutture Innovazione e Sviluppo SpA (BIIS) (BIIS), and Cassa di Risparmio in Bologna SpA. Outlooks on all seven banks is negative. S&P also lowered Banca Nazionale del Lavoro SpA (BNL) from ‘AA-/A-1+’ to ‘A+/A-1’ with a negative outlook.
Other companies getting a nod today include CNH Global NV (NYSE: CNH), Ralcorp Holdings Inc. (NYSE: RAH), Stillwater Mining Corp. (NYSE: SWC), and Fiat SpA (OTC: FIATY), owners of US automaker Chrysler.
CNH Global NV (NYSE: CNH) received ratings today from both S&P and Moody’s on the issuance of $859 million in asset-backed securities collateralized by equipment retail installment sales. CNH is a maker of tractors and other farming and construction equipment. The securities are being issued in a series of five notes, of which three senior notes received ‘AAA’ ratings from both agencies. The other senior note received an ‘A-1+’ rating from S&P and an ‘A’ rating from Fitch Ratings. The $26 million offering of Class B subordinated notes received a rating of ‘A+’ from S&P and ‘A’ from Fitch.
Ralcorp Holdings Inc. (NYSE: RAH) remained on CreditWatch with negative implications at S&P following the company’s rejection of the latest merger offer from ConAgra Foods, Inc. (NYSE: CAG). The agency remains “uncertain” concerning Ralcorp’s plan to spin-off its Post Foods group in a tax-free transaction to the company’s shareholders. S&P is dubious about Ralcorp’s ability to maintain cash flow and about Ralcorp’s plans for using the estimated $1 billion in net cash that it will receive from the spin-off.
Stillwater Mining Corp. (NYSE: SWC) received a ‘B2’ rating from Moody’s on a proposed $300 million in senior unsecured notes due 2016. The company’s outlook is rated stable. In a related action, the agency upgraded $30 million in unsecured Montana Board of Investments revenue bonds from ‘Caa1’ to ‘B2’. Stillwater plans to use some of the proceeds from the $300 million issuance to pay part of the cash portion of its $487 million acquisition of Peregrine Metals announced in July.
Fiat SpA (OTC: FIATY) received a downgrade to its corporate family rating and its probability of default rating from Moody’s. Both ratings went down one notch, from ‘Ba2’ to ‘Ba1′. At the same time the agency lowered debt ratings with a negative outlook on three of Fiat’s finance subsidiaries in North America. Moody’s noted that this is the final change related to Fiat’s increase in its stake of Chrysler. Interestingly, what many analysts have seen as a plus in Fiat’s acquisition of Chrysler is the promise of using common technology and parts in all the combined companies’ cars. Moody’s views that as a negative, stating that it “could result in the two companies having to support each other in the event of financial difficulty,” even though Fiat does not guarantee Chrysler’s debt.
Paul Ausick
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