FRANKFURT, Germany (Jan. 28, 2009)—Standard & Poor's Ratings Services has downgraded its long- and short-term corporate credit ratings on Continental A.G.
S&P said the downgrade, which follow Conti's revised business plan and renegotiation of financial covenants, reflects its view that Conti appears unlikely to achieve S&P's mimum debt protection requirements of funds from operations to debt ratio of 25 percent and debt to EBITDA ratio of less than three times, which the ratings agency formulated in September.
It also reflects the refinancing risks the company faces in 2010 and the potentially negative impact of Continental's ownership by Schaeffler A.G.
S&P also said it has revised its financial expectations for Conti for 2010 in light of likely lower earnings for 2009 and said it has concluded that the expected improvement in debt protection measures is “unlikely to materialize to the extent we had originally envisaged.”
S&P lowered its long-term credit rating to “BB” from “BBB-” and short-term to “B” from “A-3.”