BANGALORE (Thomson Financial) - Moody's Investors Service affirmed its 'B1' corporate family rating of DaimlerChrysler Financial Services Americas LLC (Chrysler Financial) in connection with its affirmation of the 'B3' corporate family rating on Chrysler Automotive LLC.
The outlook for both firms remains stable.
Moody's said Chrysler Financial's ratings continue to be linked with those of Chrysler Automotive due to common ownership and control by the Cerberus-led buyout group. Common control of the firms can lead to decisions at the board and operating levels that disproportionately benefit one firm relative to the other, which has the effect of correlating the performance and financial condition of the two companies, it said.
The two-notch differential between the Chrysler Financial and Chrysler Automotive ratings reflects Moody's view that Chrysler Financial's creditors would experience a lower loss severity upon default than would the creditors of Chrysler Automotive. Chrysler Financial's mostly prime quality finance and lease assets possess more visible and predictable cash flow and liquidity characteristics than the industrial assets of the auto manufacturing affiliate.
It expects near term operating conditions for both the auto manufacturer and finance company to be challenging, due to competitive factors, pressure on borrowing costs, and emerging concerns regarding the economic drivers and consumer financial health. TFN.newsdesk@thomson.com jro/ash/ran COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
The outlook for both firms remains stable.
Moody's said Chrysler Financial's ratings continue to be linked with those of Chrysler Automotive due to common ownership and control by the Cerberus-led buyout group. Common control of the firms can lead to decisions at the board and operating levels that disproportionately benefit one firm relative to the other, which has the effect of correlating the performance and financial condition of the two companies, it said.
The two-notch differential between the Chrysler Financial and Chrysler Automotive ratings reflects Moody's view that Chrysler Financial's creditors would experience a lower loss severity upon default than would the creditors of Chrysler Automotive. Chrysler Financial's mostly prime quality finance and lease assets possess more visible and predictable cash flow and liquidity characteristics than the industrial assets of the auto manufacturing affiliate.
It expects near term operating conditions for both the auto manufacturer and finance company to be challenging, due to competitive factors, pressure on borrowing costs, and emerging concerns regarding the economic drivers and consumer financial health. TFN.newsdesk@thomson.com jro/ash/ran COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
© 2007 AFX News
