Fiat's outlook was negative, is now stable - Fitch
Reuters
NEW YORK, Jan 20 (Reuters) - Fitch Ratings on Friday changed its rating outlook on Italian car maker Fiat SpA (FIA.MI: Quote, Profile, Research) to stable from negative, indicating there is less chance of a rating downgrade over the next two years.
Early signs that the company's restructuring plan is on track and Fiat Auto's stabilizing market share in late 2005 contributed to the change in outlook, Fitch said in a statement.
"We believe that the trough has been reached, both from a financial and business perspective, and that the group has initiated a rebound," said Emmanuel Bulle, a director in Fitch's European corporate group.
Fiat's net debt from industrial activities was halved in 2005 to 4.7 billion euros as of the end of the third quarter and now appears more manageable, Fitch said. Cash flow was strong in 2005 and should be positive in 2006, the rating agency added.
Fiat also dissolved joint ventures with General Motors Corp. (GM.N: Quote, Profile, Research) last year and required GM to pay it 1.55 billion euros to settle a put option dispute, Fitch said.
Fiat is still facing challenges, however, the rating agency said. "Most of Fiat's divisions, and in particular Fiat Auto, operate in a very difficult environment with weak growth prospects and intense competition," Fitch said.
Fitch rates Fiat's senior unsecured debt "BB-minus," three steps below investment grade.