MILAN, July 16 Fitch Ratings has cut Italy's
Finmeccanica to junk with a negative outlook, citing
weaker market outlook and delays in its 1 billion euros ($1.30
billion) asset disposal plan.
Fitch is the second rating agency to cut its credit rating
for the debt-laden aerospace and defence group to below
investment grade after Standard & Poor's in January.
Analysts have said downgrades to junk could impact the
ability of Finmeccanica, Italy's second-largest private sector
employer, to receive pre-payments from customers and harm its
competitiveness outside Italy.
"The previously assumed improvements in the financial
profile relating to de-leveraging and underlying cash generation
in the short term are unlikely to be achieved," Fitch said in a
statement on Tuesday.
The agency reduced the long-term issuer default rating (IDR)
to 'BB+' from 'BBB-' and the short-term IDR to 'B' from 'F3'. It
kept its outlook on negative - a warning of the risk of another
Fitch said it had previously assumed that the Rome-based
group would complete asset sales worth up to 1 billion euros by
early 2013, the proceeds of which were to be applied to cut
Political wrangling has slowed the sale of company units
AnsaldoEnergia, AsaldoBreda and Ansaldo STS. To date
the group has only agreed to sell its stake in aero engine parts
maker Avio for 260 million euros.
The group generates over half of its revenues from defence
markets including Italy, the US and Britain which are facing
uncertain budget outlooks.
Finmeccanica is targeting a net profit in 2013 after two
years in the red. It has been hit by a corruption probe relating
to a helicopter deal in India and has recently named a new
Company shares were down 0.16 percent at 3.72 euros at 1248
GMT, while blue-chip Milan index was down 0.18 percent.