PARIS Oct 22 Troubled French automaker PSA
Peugeot Citroen may need state backing for its car
loans arm as soon as this week because publication of the
group's quarterly sales on Wednesday may trigger debt rating
downgrades, Les Echos newspaper reported.
Peugeot said last week that it was weighing a state-backed
rescue for Banque PSA Finance (BPF), as recent ratings
downgrades at the group threatened to relegate the financing arm
to junk status. Such a move would further widen the automaker' s
competitiveness gap by making its loans more expensive.
Les Echos said the issue of state support for BPF was due to
be discussed in a crisis meeting at the offices of French Prime
Minister Jean-Marc Ayrault on Monday.
Peugeot and the prime minister's office declined to comment.
Peugeot's quarterly sales figures on Wednesday will probably
force ratings agencies to cut their ratings on the carmaker, and
thus on BPF, Les Echos said.
"The state could have to provide its support from this
week," the report cited an unidentified government source as
Punished by its costly domestic production and excess
capacity, Peugeot is losing a European price war to larger and
leaner rivals such as Volkswagen.
Finance Minister Pierre Moscovici said last week that
officials were working on measures to help BPF obtain the
financing it needs and said that would be finalised very soon.
BPF offers financing for Peugeot and Citroen dealers and
Moody's cut the automaker' s debt rating earlier this month
to Ba3, three notches below investment grade, raising the
likelihood that the financing arm would also be relegated.
In July, Standard & Poor's also cut Peugeot to BB, two rungs
below investment grade, with a "negative" outlook signalling a
further reduction was likely.
While loans divisions are evaluated separately by the major
agencies, their ratings are not allowed to stay more than two
notches above the parent carmaker's.
(Reporting by James Regan, Gilles Guillaume and Elizabeth
Pineau; Editing by Dan Grebler)