FIAT = Junk Status!

[Dredly]

On news that Fiat was going to take over Chrysler, the S&P lowered their bond rating to JUNK STATUS! They weren't doing great before but this is just a slap in the face, and they may be cut again

http://www.reuters.com/article/merge...42408420090331

S&P cuts Fiat to junk status, may cut again
Tue Mar 31, 2009 1:21pm EDT

NEW YORK, March 31 (Reuters) - Standard & Poor's on Tuesday cut its ratings on Fiat SpA (FIA.MI) to junk status and said it may cut them again, citing the auto maker's weak liquidity and upcoming debt maturities.

The downgrade came on the same day that Fiat was set for talks with Chrysler LLC labor unions and creditors after U.S. authorities gave the carmakers 30 days to set up a partnership to save Chrysler.

S&P cut Fiat's rating by one notch BB-plus, the highest junk rating, from BBB-minus. The rating remains on review for another downgrade.

Fiat first announced its plans for a partnership with Chrysler in January. The Italian group would give technology for small cars and access to foreign markets in exchange for a stake in Chrysler and entry into the U.S. market.

"We do not expect Fiat to commit any significant funds to support Chrysler LLC following the U.S. government's most recent analysis of Chrysler's financial needs to survive," S&P said. "Still, we expect more details in the coming weeks on the proposed Chrysler-Fiat alliance."

S&P said it considers Fiat's liquidity weak.

"The large 2008 cash burn in Fiat's industrial activity and the need to support CNH's finance operation in North America have dented the group's financial position," S&P said. CNH is Fiat's U.S. farming equipment maker.

Lower demand for autos and trucks could also hurt Fiat's operating performance and increase the risk it will burn more cash this year, S&P said in a statement.

(Reporting by Dena Aubin, Editing by Chizu Nomiyama) (dena.aubin@thomsonreuters.com; +1-646-223-6325; Reuters Messaging: dena.aubin.reuters.com@reuters.net))

[adymond]

Yay! They sound like perfect partners for US auto makers. Makes perfect sense to pressure a US auto maker to finalize a deal in oh say 30 days.