Moody’s says auto suppliers land in the “high exposure” category of Moody’s Coronavirus heat map, indicating potential near-term implications for credit quality and possibly ratings.
Moody’s Investors Service downgraded the ratings of The Goodyear Tire & Rubber Co. including the corporate family and probability of default ratings to Ba3 from Ba2, and Ba3-PD from Ba2-PD, respectively.
Moody’s Investors Service downgraded ATD’s Probability of Default Rating (PDR) following the company’s announcement that it had initiated Chapter 11 bankruptcy proceedings.
Moody’s downgraded ATD’s probability of default rating and other ratings for senior subordinated notes after it announced a plan for a debt-for-equity exchange that it will offer bondholders.
Moody’s analyst Inna Bodeck has essentially raised a red flag of concern about the solvency of ATD in the future.
American Tire Distributors’ debt took a dive Wednesday after Bridgestone Americas announced it would pull the distribution of its passenger and light truck tires from the company.
A 25% tariff being considered on vehicles and auto parts imported to the U.S. would be broadly credit negative for the global auto industry, Moody’s Investors Service says in a new report.
“All else being equal, the magnitude of the associated earnings and cash flow decline will compound an already levered financial risk profile, rendering a pre-emptive debt restructuring increasingly likely, in our estimation,” says Inna Bodeck, Moody’s lead analyst covering ATD.
Even as the company increases its debt, analysts at Moody’s say the slight increase is not enough to trigger a rating downgrade at the time.
Moody’s Investors Service placed its ratings for Dealer Tire, LLC under review for downgrade after Bridgestone and Goodyear announced its plans to form a joint distribution venture, TireHub.
Update: This story has been updated with more information regarding Goodyear and its aligned distributors.