MILAN -- Fiat's debt-refinancing risk is likely to increase toward 2005 and 2006 thanks to a lack of free cash flow to contribute to debt repayment, Standard & Poor's said in a statement on Tuesday.
The note, released after Fiat announced second-quarter results on Monday, said S&P did not expect Fiat's free operating cash flow to turn positive before 2006.
Fiat has 6.8 billion euros of short-term debt maturing by June 30, 2005, S&P analyst Nicolas Baudouin said in the note, which he said was "deemed manageable".
Fiat said on Monday that it was on track to break even at operating level this year but pushed back "overly optimistic" targets at its core car unit, saying Fiat Auto would only turn a profit in 2006.
Baudouin also wrote that he doubted a 3.0 billion euro loan to Fiat from top Italian banks which expires in October 2005 would be converted into equity.
The credit agency last year cut its rating on Fiat's long-term corporate credit rating by two notches to "BB-minus", its third-highest junk rating. Moody's also has a non-investment-grade rating on Fiat debt, of Ba3.