S&P ups Chrysler rating to match Fiat on VEBA deal
Ratings agency Standard & Poor’s Financial Services has raised its rating of Chrysler Group one notch to BB- to match that of its corporate parent, Fiat.
The ratings upgrade from B+ comes as a direct result of Fiat’s agreement to acquire the remaining outstanding stock in Chrysler from the UAW Retiree Health Care trust, known as the VEBA, S&P explained.
BB- is three levels below what S&P considers investment grade.
The $4.35 billion transaction was announced by Fiat on Jan. 1, and is expected to be complete on or around Jan. 20.
S&P said that completion of the transaction for VEBA’s 41.5 percent stake would make Chrysler a “core” subsidiary of Fiat under its rating methodology. S&P reaffirmed its BB- rating of Fiat today.
On Tuesday, rival ratings agency Moody’s placed Fiat’s rating under review for a possible downgrade to reflect the impact on the Italian automaker’s cash position of its plans to take full control of Chrysler Group.
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